Exhibit 10.1
Execution
Version
SECURITIES PURCHASE AND
REGISTRATION RIGHTS AGREEMENT
Between
STAR SCIENTIFIC,
INC.,
as Issuer,
And
The Investors Set Forth on
Schedule I hereto
March 2, 2009
This SECURITIES PURCHASE AND
REGISTRATION RIGHTS AGREEMENT (this “ Agreement
”) is entered into and effective as of March 2, 2009,
between Star Scientific, Inc., a Delaware corporation (the “
Company ”), and the several investors set forth on
Schedule I hereto (each an “ Investor ”
and collectively, the “ Investors ”).
WHEREAS, each Investor has
previously entered into one or more securities purchase and
registration rights agreements with the Company (each a “
Prior Agreement ” and collectively, the “
Prior Agreements ”), whereby the Company sold to each
Investor and each Investor purchased from the Company a warrant (in
each case a “ Prior Warrant ” and collectively,
the “ Prior Warrants ”), to purchase the amount
of shares of the Company’s common stock, par value $0.0001
per share (“ Common Stock ”), set forth opposite
each Investor’s name under the heading “Prior Warrant
Shares” on Schedule I (in each case, the “
Prior Warrant Shares ”), having a per share exercise
price set forth opposite each Investor’s name under the
heading “Prior Exercise Price” on Schedule I
hereto;
WHEREAS, the Company and each
Investor desire that upon the terms and conditions set forth herein
that: (i) Investor will exercise its Prior Warrant in full
thereby purchasing its Prior Warrant Shares (A) at the
exercise price and (B) for the aggregate exercise price set
forth opposite the Investor’s name under the headings
“Exercise Price” and “Aggregate Exercise
Price”, respectively, on Schedule I hereto and that
the Company issue to the Investor its respective Prior Warrant
Shares; and (ii) Investor will purchase from the Company and
the Company will sell and issue to the Investor a warrant,
substantially in the form attached hereto as Exhibit A (the
“ Warrant ”), to purchase the amount of shares
of the Company’s Common Stock set forth opposite the
Investor’s name under the heading “New Warrants”
on Schedule I hereto (in each case, the “ Warrant
Shares ”), having an exercise price set forth opposite
Investor’s name under the heading “New Exercise
Price” on Schedule I hereto;
WHEREAS, each Investor acknowledges
that as an inducement for the Company to enter into this Agreement,
the Investor has waived its rights under Section 12 of its
Prior Warrants, with regard to the transactions contemplated
hereby; and
WHEREAS, each Investor will have
registration rights with respect to the Warrant Shares and other
Registrable Securities (as defined herein) pursuant to the terms of
this Agreement.
NOW, THEREFORE, in consideration of
the foregoing premises and the covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1. Agreement to Sell and Purchase
the Prior Warrant Shares and Warrant . At the Closing (as
defined herein), the Company will sell to each Investor, and each
Investor will purchase from the Company, upon the terms and subject
to the conditions hereinafter set forth, its Prior Warrant Shares
and the Warrant for the aggregate purchase price set forth opposite
each Investor’s name under the heading “Aggregate
Exercise Price” on Schedule I hereto.
2. Delivery of the Prior Warrant
Shares and Warrant at Closing . The completion of the purchase,
sale and issuance of the Prior Warrant Shares and the Warrant (the
“ Closing ”) shall occur on the date of this
Agreement (the “ Closing Date ”) (or upon such
other date as the Company and each Investor shall agree), at the
offices of the Company’s counsel. At the Closing, the
Company
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shall issue to each Investor as indicated on
Schedule I hereto (i) one or more stock certificates,
registered in the Investor’s name and address as set forth on
Schedule I hereto, representing the Prior Warrant Shares and
(ii) the Warrant issued in the name of the Investor. The
Company’s obligation to issue the Prior Warrant Shares and
the Warrant to each Investor shall be subject to the following
conditions, any one or more of which may be waived by the Company:
(i) receipt by the Company of a wire transfer of immediately
available funds to an account designated in writing by the Company,
in the full amount of the total purchase price payable by the
Investor for the Prior Warrant Shares and Warrant that the Investor
is hereby agreeing to purchase set forth opposite the name of such
Investor under the heading “Aggregate Exercise Price”
on Schedule I hereto; (ii) receipt by the Company of an
executed Notice of Exercise Form annexed to each Prior Warrant
covering the Prior Warrant Shares of the Investor; and
(iii) the accuracy, in all material respects, of the
representations and warranties made by the Investor and the
fulfillment, in all material respects, of those undertakings of the
Investor to be fulfilled prior to the Closing. Each
Investor’s obligation to purchase the Prior Warrant Shares
shall be subject to the following conditions, any one or more of
which may be waived by an Investor (provided that no such waiver
shall be deemed given unless in writing and executed by the
Investor): (i) receipt by the Investor of a counter-signed
copy of this Agreement executed by the Company; (ii) receipt
by the Investor of a copy of the Warrant; (iii) receipt by the
Investor of evidence of irrevocable instructions issued by the
Company to the Company’s transfer agent instruction the
transfer agent to issue to the Investor a stock certificate
representing the Investor’s Prior Warrant Shares (subject to
full satisfaction of the conditions to Closing set forth in this
Section 2); and (iv) the accuracy, in all material
respects, of the representations and warranties made by the Company
and the fulfillment, in all material respects, of those
undertakings of the Company to be fulfilled prior to the
Closing.
3. Representations, Warranties
and Covenants of the Company . The Company hereby represents
and warrants to, and covenants with each Investor, as
follows:
3.1 Organization . Each of
the Company and its Subsidiaries (as defined in Rule 405 under
the Securities Act of 1933, as amended (the “ Securities
Act ”)) is duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization.
Each of the Company and its Subsidiaries has full power and
authority to own, operate and occupy its properties and to conduct
its business as presently conducted and is registered or qualified
to do business and in good standing in each jurisdiction in which
it owns or leases property or transacts business and where the
failure to be so qualified would have a material adverse effect
upon the financial condition or business, operations, assets or
prospects of the Company and its Subsidiaries, taken as a whole (a
“ Material Adverse Effect ”).
3.2 Due Authorization . The
Company has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement and the Warrant,
and has taken all necessary corporate action to enter into and
perform this Agreement, to issue the Prior Warrant Shares in
accordance with the terms of this Agreement, to enter into and
perform the Warrant, and to issue the Warrant Shares in accordance
with the terms of the Warrant. This Agreement has been, and upon
the Closing in accordance with the terms of the Agreement, the
Warrant will be, duly authorized, validly executed and delivered by
the Company and constitutes, or will constitute, a legal, valid and
binding agreement of the Company enforceable against the Company in
accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally
and except as enforceability may be subject to general principles
of equity
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(regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Upon their issuance in accordance with the terms of this Agreement
and the Prior Warrants, the Prior Warrant Shares will be duly
authorized, validly issued, fully paid and non-assessable, the
Warrant will be duly authorized and validly issued, and the Warrant
Shares, upon exercise of the Warrant in accordance with its terms,
will be duly authorized.
3.3 Non-Contravention .
Except as would not reasonably be expected to have a Material
Adverse Effect, the execution and delivery of this Agreement, the
issuance and sale of the Prior Warrant Shares and the Warrant under
this Agreement, the fulfillment of the terms of this Agreement and
the consummation of the transactions contemplated hereby will not
(i) conflict with or constitute a violation of, or default
(with or without the giving of notice or the passage of time or
both) under, (A) any material bond, debenture, note or other
evidence of indebtedness, or under any material lease, indenture,
mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or any Subsidiary is a
party or by which it or any of its Subsidiaries or their respective
properties are bound, (B) the charter, by-laws or other
organizational documents of the Company or any Subsidiary, or
(C) any law, administrative regulation, ordinance or order of
any court or governmental agency, arbitration panel or authority
applicable to the Company or any Subsidiary or their respective
properties, or (ii) result in the creation or imposition of
any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the
Company or any Subsidiary or an acceleration of indebtedness
pursuant to any obligation, agreement or condition contained in any
material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust or
any other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which
any of the property or assets of the Company or any Subsidiary is
subject. No consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body,
administrative agency, self-regulatory organization, stock exchange
or market, or other governmental body in the United States is
required for the execution and delivery of this Agreement, the
valid issuance and sale of the Prior Warrant Shares and Warrant
pursuant to this Agreement, other than such as have been made or
obtained, and except for any securities filings required to be made
under federal or state securities laws.
3.4 SEC Filings . Since
January 1, 2008, the Company and its Subsidiaries have filed
all reports, schedules, forms, statements and other documents
required to be filed by it with the Securities and Exchange
Commission (the “ Commission ”) pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”) (such reports,
including exhibits thereto and documents incorporated by reference
therein collectively, the “ SEC Documents ”). To
the best of the Company’s knowledge, as of their respective
filing dates, none of the SEC Documents contained an untrue
statement of material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light and circumstances under which
they were made, not misleading, except to the extent corrected by
subsequently filed SEC Documents.
3.5 Absence of Certain Change
. Except as disclosed in the SEC Documents, since
September 30, 2008, there has been no adverse change or
adverse development in the business, properties, assets,
operations, financial condition, prospects, liabilities or results
of operations of the Company or its Subsidiaries which to the
knowledge of the Company would reasonably be expected to have a
Material Adverse Effect.
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3.6 Capitalization . As of
February 2, 2009, the authorized capital stock of the Company
consists of (i) 135,000,000 shares of Common Stock, of which
92,516,497 shares are issued and outstanding and 27,095,032 shares
are issuable and reserved for issuance pursuant to the
Company’s stock option plans or securities exercisable or
exchangeable for, or convertible into, shares of Common Stock, and
(ii) 100,000 shares of preferred stock, of which as of the
date hereof no shares are issued. All of such outstanding shares
have been, or upon issuance will be, validly issued, fully paid and
nonassessable. Except as disclosed in the SEC Documents, as of the
date hereof, (i) no shares of the Company’s capital
stock are subject to preemptive rights or any other similar rights
or any liens or encumbrances suffered or permitted by the Company,
(ii) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares
of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock
of the Company or any of its Subsidiaries, (iii) there are no
outstanding securities of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to
redeem a security of the Company or any of its Subsidiaries, and
(iv) the Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar
plan or agreement. The Company disclosed in its SEC Documents or
has furnished to Investor true and correct copies of the
Company’s Certificate of Incorporation, as amended and as in
effect on the date hereof (the “ Certificate of
Incorporation ”), and the Company’s By-laws, as in
effect on the date hereof (the “ By-laws
”).
3.7 Registration of the Prior
Warrant Shares .
(a) The Prior Warrant Shares have
been duly registered for resale pursuant to registration statements
on Form S-3 (the “ Prior Registration Statements
”) filed pursuant to the Prior Agreements.
(b) The Prior Registration
Statements have been declared effective by the Commission, and no
stop order relating thereto has been issued and, to the
Company’s knowledge, no such stop order has been threatened
or proceeding to issue such a stop order commenced.
(c) The prospectuses contained in
the Prior Registration Statements are current and may be used by
the Investors for resale of the Prior Warrant Shares.
(d) The Prior Warrant Shares are
duly listed for trading on the Nasdaq Global Market (the “
Principal Market ”) upon issuance.
3.8 Broker . The Company has
taken no action which would give rise to any claim by any person
for brokerage commissions, finder’s fees or similar payments
by the Company or the Investors relating to this Agreement or the
transactions contemplated hereby.
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4. Representations, Warranties
and Covenants of Investor . Each Investor severally for itself,
and not jointly with the other Investors, represents and warrants
to, and covenants with the Company, as follows:
4.1 Due Authorization;
Organization . Investor has all requisite power, authority and
capacity to execute, deliver and perform its obligations under this
Agreement, and has taken all necessary corporate, company,
partnership or individual action as the case may be to enter and
perform this Agreement. This Agreement has been duly authorized and
validly executed and delivered by Investor and constitutes a legal,
valid and binding agreement of Investor enforceable against
Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). Any individual retirement account
(“ IRA ”) to which the Prior Warrant Shares, the
Warrant or Warrant Shares may be issued and delivered on behalf of
the Investor, if applicable, is duly organized and validly existing
in good standing under the laws of the jurisdiction of its
organization. Such IRA has full power and authority to own, operate
and occupy its properties and to conduct its business as presently
conducted and is registered or qualified to do business and in good
standing in each jurisdiction in which it owns or leases property
or transacts business and where the failure to be so qualified
would have a material adverse effect on the financial condition of
Investor or such IRA.
4.2 Non-Contravention . The
execution and delivery of this Agreement, the purchase of the Prior
Warrant Shares and the Warrant under this Agreement, the
fulfillment of the terms of this Agreement and the consummation of
the transactions contemplated hereby will not (i) conflict
with or constitute a violation of, or default (with or without the
giving of notice or the passage of time or both) under,
(A) any material bond, debenture, note or other evidence of
indebtedness, or under any material lease, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or
instrument to which Investor is a party, (B) the charter,
by-laws or other organizational documents of Investor, as
applicable, or (C) any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to Investor or its property, or
(ii) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever
upon any of the material properties or assets of Investor or an
acceleration of indebtedness pursuant to any obligation, agreement
or condition contained in any material bond, debenture, note or any
other evidence of indebtedness or any material indenture, mortgage,
deed of trust or any other agreement or instrument to which
Investor is a party or by which any of them is bound or to which
any of the property or assets of Investor is subject. No consent,
approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative
agency, self-regulatory organization, stock exchange or market, or
other governmental body in the United States is required for the
execution and delivery of this Agreement and the purchase of the
Prior Warrant Shares and the Warrant by Investor, other than such
as have been made or obtained.
4.3 Private Placement .
Investor represents and warrants to, and covenants with, the
Company that Investor is acquiring the Prior Warrant Shares and the
Warrant for its own account for investment only and with no present
intention of distributing any of the Prior Warrant Shares, the
Warrant or the Warrant Shares in violation of the applicable
securities laws, or any arrangement or understanding with any other
persons regarding the distribution of the Prior Warrant
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Shares, Warrant or Warrant Shares.
Investor has been advised and understands that neither the Warrant
nor the Warrant Shares have been registered under the Securities
Act or under the “blue sky” or similar laws of any
jurisdiction and may be resold only if registered pursuant to the
provisions of the Securities Act and such other laws, if
applicable, or, subject to the terms and conditions of this
Agreement, if an exemption from registration is available. Investor
has been advised and understands that the Company, in issuing the
Prior Warrant Shares and the Warrant, is relying upon, among other
things, the representations and warranties of Investor herein in
concluding that such issuance is a “private offering”
and is exempt from the registration provisions of the Securities
Act.
4.4 Certain Trading
Activities . Neither Investor nor any of its affiliates has
directly or indirectly, nor has any person acting on behalf of or
pursuant to any understanding with such Investor, engaged in any
purchase or sale of Common Stock (including, without limitation,
any Short Sales (as defined below) involving the Company’s
securities) since the date that such Investor was presented with
draft documentation relating to the transactions proposed
hereby. For the purposes of this Section 4.4 ,
“Short Sales” include, without limitation, all
“short sales” as defined in Rule 200 of Regulation SHO
adopted under the Exchange Act and all types of direct and indirect
stock pledges, forward sales contracts, options, puts, calls, short
sales and other transaction through non-US broker-dealers or
foreign regulated brokers having the effect of hedging the
securities of the Company or the investment contemplated under this
Agreement. Such Investor covenants that neither it, nor any
person acting on its behalf or pursuant to any understanding with
it, will engage in any transaction in the securities of the Company
(including short sales) prior to the filing of a Current Report on
Form 8-K, Annual Report on Form 10-K, press release, or other
applicable Exchange Act report reporting this
transaction.
4.5 No Advice . Investor
understands that nothing in this Agreement or any other materials
presented to Investor in connection with the purchase and sale of
the Prior Warrant Shares and the Warrant constitutes legal, tax or
investment advice. Investor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the
Prior Warrant Shares and the Warrant.
4.6 Accredited Investor .
Investor is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D under the Securities Act and
is able to bear the risk of its investment in the Prior Warrant
Shares, Warrant, and Warrant Shares. Investor has such knowledge
and experience in financial and business matters that it is capable
of evaluating the merits and risks of the purchase of the Prior
Warrant Shares, Warrant and Warrant Shares.
4.7 Limited Representations .
Investor and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the
Company and its Subsidiaries which have been requested and
materials relating to the offer and sale of the Prior Warrant
Shares, Warrant, and Warrant Shares, which have been requested by
Investor. Investor and its advisors, if any, have been afforded the
opportunity to ask such questions of the Company as they deem
appropriate for purposes of the investment contemplated hereby.
Investor acknowledges and agrees that the most recent disclosure of
the Company’s results is for the three and nine month periods
ended on, and the most recent disclosure of the Company’s
financial condition is at, September 30, 2008, as reported on
the Company’s quarterly report on Form 10-Q, filed with the
Commission on November 10, 2008, and that, except as disclosed
in the SEC documents, no information more recent than such date has
been provided to Investor as to the Company’s
results,
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operations, financial condition,
business or prospects. Investor understands that its purchase of
the Prior Warrant Shares, Warrant and, if applicable, Warrant
Shares involves a high degree of risk and that Investor may lose
its entire investment in the Prior Warrant Shares, Warrant and, if
applicable, Warrant Shares, and that Investor can afford to do so
without material adverse consequences to its financial condition.
Investor is not relying on any information provided by the Company
and its Subsidiaries, except to the extent provided in
Section 3 herein.
4.8 No Recommendation .
Investor understands that no United States federal or state agency
or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Prior Warrant Shares,
Warrant or Warrant Shares or the fairness or suitability of an
investment in the Prior Warrant Shares, Warrant or Warrant Shares
nor have such authorities passed upon or endorsed the merits
thereof.
4.9 Restrictive Legend . The
Company shall issue the Warrant and certificates for the Prior
Warrant Shares and, if applicable, Warrant Shares to Investor with
a legend as described in Section 6 below. Investor
covenants that, in connection with any transfer of any Prior
Warrant Shares or Warrant Shares pursuant to the Prior Registration
Statements or registration statement contemplated by
Section 5 hereof, as applicable, including the
prospectuses contained therein, Investor will comply with the
applicable prospectus delivery requirements of the Securities Act,
provided that copies of a current prospectus relating to such
effective registration statements are available to
Investor.
4.10 Residence . Investor is
a resident or organized under the laws of the jurisdiction set
forth next to Investor’s name on Schedule I
hereto.
4.11 No Market . Investor
understands that the Prior Warrant Shares are and, upon exercise of
the Warrant, the Warrant Shares will be restricted securities and
that there is no public trading market for the Warrant, that none
is expected to develop, and that the Prior Warrant Shares, Warrant
and Warrant Shares must be held indefinitely unless and until the
resale of such Prior Warrant Shares, Warrant or Warrant Shares is
registered under the Securities Act or subject to the terms and
conditions of this Agreement and the applicable securities laws, an
exemption from registration is available. Investor has been advised
or is aware of the provisions of Rule 144 promulgated under the
Securities Act.
4.12 No Commissions .
Investor has taken no action which would give rise to any claim by
any person for brokerage commissions, finder’s fees or
similar payments by the Company or Investor relating to this
Agreement or the transactions contemplated hereby.
4.13 Transactional Exemption
. Investor understands that the Prior Warrant Shares, Warrant and
Warrant Shares are being offered and sold in reliance on a
transactional exemption from the registration requirements of
federal and state securities laws and that the Company is relying
upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of Investor set
forth herein in order to determine the applicability of such
exemptions and the suitability of Investor to acquire the Prior
Warrant Shares, Warrant and Warrant Shares.
4.14. Investor Undertaking .
Investor covenants that it will not sell, transfer, assign,
hypothecate or pledge in any way any of the Prior Warrant Shares or
the Warrant Shares unless the
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resale of the Prior Warrant Shares
or Warrant Shares, as applicable, have been registered for resale
under the Securities Act and in compliance with applicable
prospectus delivery requirements, if any, or otherwise in
compliance with the requirements of an available exemption from
registration under the Securities Act and the rules and regulations
promulgated thereunder.
5. Registration Rights
.
5.1 Certain
Definitions
“ Holder” and
“Holders ” shall include Investor and any
transferee or transferees of Registrable Securities to whom the
registration rights conferred by this Agreement and the Prior
Purchase Agreements, have been transferred in compliance with this
Agreement and the Prior Purchase Agreements.
The terms “ register
,” “ registered ” and “
registration ” shall refer to a registration effected
by preparing and filing a registration statement in compliance with
the Securities Act and applicable rules and regulations thereunder,
and the declaration or ordering of the effectiveness of such
registration statement.
“ Registrable
Securities ” shall mean: (i) Warrant Shares issued
or issuable to each Holder (A) with respect to the Warrant
Shares, upon exercise of the Warrant, (B) upon any
distribution with respect to, any exchange for or any replacement
of such Warrant, or (C) upon any conversion, exercise or
exchange of any securities issued in connection with any such
distribution, exchange or replacement; (ii) securities issued
or issuable upon any stock split, stock dividend, recapitalization
or similar event with respect to the foregoing; and (iii) any
other security issued as a dividend or other distribution with
respect to, in exchange for or in replacement of the securities
referred to in the preceding clauses, except that any such Warrant
Shares or other securities shall cease to be Registrable Securities
when (D) they have been sold to the public or (E) they
may be sold by the Holder thereof without restriction pursuant to
Rule 144.
“ Registration Expenses
” shall mean all expenses to be incurred by the Company in
connection with each Holder’s registration rights under this
Agreement (such amount not to exceed $5,000 in the aggregate),
including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the
Company, and blue sky fees and expenses, reasonable fees and
disbursements of counsel to Holders (using a single counsel
selected by a majority in interest of the Holders) for a review of
the Registration Statement (as defined herein) and related
documents, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any
event by the Company).
“ Selling Expenses
” shall mean all underwriting discounts, selling commissions
and transfer taxes applicable to the sale of Registrable Securities
and all fees and disbursements of counsel for Holders not included
within “Registration Expenses”.
5.2 Registration Requirements
. The Company shall use its reasonable best efforts to effect the
registration of the resale of the Registrable Securities
(including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate
compliance
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with applicable regulations issued
under the Securities Act) as would permit or facilitate the resale
of all the Registrable Securities in the manner (including manner
of sale) and in all states reasonably requested by the Holder. Such
reasonable best efforts by the Company shall include, without
limitation, the following:
(a) The Company shall, as
expeditiously as possible:
(i) But in any event within 60 days
of the Closing, prepare and file a registration statement with the
Commission pursuant to Rule 415 under the Securities Act on Form
S-3 under the Securities Act (or in the event that the Company is
ineligible to use such form, such other form as the Company is
eligible to use under the Securities Act provided that such other
form shall be converted into a Form S-3 promptly after Form S-3
becomes available to the Company) covering resales by the Holders
as selling stockholders (not underwriters) of the Warrant Shares
issuable upon full exercise of the Warrants (the “
Registration Statement ”). The Company shall use its
reasonable best efforts to cause such Registration Statement and
other filings to be declared effective as soon as possible, and in
any event prior to 120 days (or, if the Commission elects to review
the Registration Statement, 180 days) following the
Closing.
(ii) Without limiting the foregoing,
the Company will promptly respond to all Commission comments,
inquiries and requests, and shall request acceleration of
effectiveness of the Registration Statement at the earliest
possible date. The Company shall provide the Holders reasonable
opportunity to review the portions of any such Registration
Statement or amendment or supplement thereto containing disclosure
regarding the Holders prior to filing.
(iv) Prepare and file with the
Commission such amendments and supplements to such Registration
Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such Registration Statement and notify
the Holders of the filing and effectiveness of such Registration
Statement and any amendments or supplements.
(v) Furnish or otherwise make
available to each Holder copies of a current prospectus included in
the Registration Statement conforming with the requirements of the
Securities Act, copies of the Registration Statement, any amendment
or supplement thereto and any documents incorporated by reference
therein and such other documents as such Holder may reasonably
require in order to facilitate the disposition of Registrable
Securities owned by such Holder.
(vi) Register and qualify the
securities covered by the Registration Statement under the
securities or “blue sky” laws of all domestic
jurisdictions, to the extent required; provided that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
9
(vii) Notify each Holder immediately
of the happening of any event (but not the substance or details of
any such events unless specifically requested by a Holder) as a
result of which the prospectus (including any supplements thereto
or thereof) included in such Registration Statement, as then in
effect, includes an untrue statement of 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 use its reasonable best efforts to
promptly update and/or correct such prospectus.
(viii) Notify each Holder
immediately of the issuance by the Commission or any state
securities commission or agency of any stop order suspending the
effectiveness of the Registration Statement or the threat or
initiation of any proceedings for that purpose. The Company shall
use its reasonable best efforts to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible time.
(ix) Permit counsel to the Holders
to review the Registration Statement and all amendments and
supplements thereto within a reasonable period of time (but not
less than two (2) full days on which there is trading on the
Principal Market or such other market or exchange on which the
Common Stock is then principally traded) prior to each filing and
will not request acceleration of the Registration Statement without
prior notice to such counsel.
(x) Qualify the Registrable
Securities covered by such Registration Statement for listing on
the Principle Market or the principal securities exchange and/or
market on which the Common Stock is then listed, including the
preparation and filing of any required filings with such principal
market or exchange.
(b) In the event that the
Registration Statement has been declared effective by the
Commission and, afterwards, any Holder’s ability to sell
Registrable Securities registered for resale under the Registration
Statement is suspended for more than (i) 45 days in any 90-day
period or (ii) 90 days in any calendar year, including without
limitation by reason of any suspension or stop order with respect
to the Registration Statement or the fact that an event has
occurred as a result of which the prospectus (including any
supplements thereto) included in the Registration Statement then in
effect includes an untrue statement of 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, then the Company shall take such
action as may be necessary to amend or supplement the Registration
Statement or the prospectus (including any supplements thereto)
included in the Registration Statement, such that the Registration
Statement or the prospectus, as so amended, shall not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements not misleading.
(c) If the Holder(s) intend to
distribute the Registrable Securities by means of an underwriting,
the Holder(s) shall so advise the Company. Any such underwriting
may only be administered by nationally or regionally recognized
investment bankers reasonably satisfactory to the
Company.
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(d) Subject to
Section 5.2(c) above, the Company shall enter into such
customary agreements (including an underwriting agreement
containing such representations and warranties by the Company and
such other terms and provisions, as are customarily contained in
underwriting agreements for comparable offerings and are reasonably
satisfactory to the Company) and take all such other actions as the
Holder or the underwriters participating in such offering and sale
may reasonably request in order to expedite or facilitate such
offering and sale other than such actions which are disruptive to
the Company or require significant management
availability.
(e) The Company shall make available
for inspection by the Holders, representative(s) of all the Holders
together, any underwriter participating in any disposition pursuant
to the Registration Statement, and any attorney or accountant
retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders’ due diligence
examination of the Company and review of the Registration
Statement, all documents filed with the Commission subsequent to
the Closing, 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 representative, underwriter, attorney or accountant in
connection with the Registration Statement, provided that such
parties agree to keep such information confidential.
Notwi
