Exhibit 10.26
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
     AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of June      , 2007, by and among The Allied Defense Group, Inc., a
Delaware corporation, with headquarters located at 8000 Towers Crescent Drive,
Suite 260, Vienna, Virginia 22182 (the “Company”), and the undersigned buyers
(each, a “Buyer”, and collectively, the “Buyers”).
     WHEREAS:
     A. The Company and the Investor (collectively with any other investors that
may become a party to this Agreement, the “Investors”) are parties to that
certain Securities Purchase Agreement, dated as of March 9, 2006 (the “Original
Securities Purchase Agreement”), pursuant to which, among other things, the
Investors purchased from the Company (i) senior subordinated convertible notes,
dated March 9, 2006 (the “Original Notes”) and (ii) warrants (the “Warrants”),
which are exercisable to purchase shares of the Company’s common stock, par
value $0.10 per share (the “Common Stock”) (as exercised, collectively, the
“Warrant Shares”).
     B. In connection with the Amended and Restated Securities Purchase
Agreement by and among the parties hereto, dated June 19, 2006 (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject to the
conditions set forth in the Securities Purchase Agreement (a) to cancel the
Original Notes and to issue to the Buyers, in exchange therefor, (i) certain
shares of Common Stock (the “Common Shares”) and (ii) certain senior secured
convertible notes (the “Amended Notes”) (as converted, the “Amended Conversion
Shares”) and (b) to issue and sell to each Buyer (i) at the Initial Closing (as
defined in the Securities Purchase Agreement), certain senior secured
convertible notes of the Company (the “Initial Notes”) and (ii) at the
Additional Closing (as defined in the Securities Purchase Agreement), certain
senior secured convertible notes of the Company (the “Additional Notes”, and
together with the Amended Notes and the Initial Notes, the “Notes”), in each
case, which Notes will, among other things, be convertible into shares of Common
Stock (as converted, the “Conversion Shares”) in accordance with the terms of
the Notes.
     C. The Notes bear interest, which at the option of the Company, subject to
certain conditions, may be paid in shares of Common Stock (the “Interest
Shares”).
     D. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to execute and deliver this Agreement which
amends, and restates in full the terms and conditions of that certain
Registration Rights Agreement, by and among the Company and the Investors, dated
as of March 9, 2006 whereby the Company agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws.
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:
     1. Definitions.
     Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase Agreement. As used
in this Agreement, the following terms shall have the following meanings:
          a. “Additional Effectiveness Date” means the date the Additional
Registration Statement is declared effective by the SEC.

 

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          b. “Additional Effectiveness Deadline” means the date which is sixty
(60) calendar days after the earlier of the Additional Filing Date and the
Additional Filing Deadline or in the event that the Registration Statement is
subject to a review by the SEC, one-hundred and twenty (120) calendar days after
the earlier of the Additional Filing Date and the Additional Filing Deadline.
          c. “Additional Filing Date” means the date on which the Additional
Registration Statement is filed with the SEC.
          d. “Additional Filing Deadline” means if Cutback Shares are required
to be included in the Additional Registration Statement, the later of (i) the
date sixty (60) days after the date substantially all of the Registrable
Securities registered under the immediately preceding Registration Statement are
sold and (ii) the date six (6) months from the Initial Effective Date or the
last Additional Effective Date, as applicable.
          e. “Additional Registrable Securities” means, (i) any Cutback Shares
not previously included on a Registration Statement and (ii) any share capital
of the Company issued or issuable with respect to the Notes, the Conversion
Shares, the Interest Shares, the Warrants, the Warrant Shares, the Common Shares
or Cutback Shares, as applicable, as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise, without
regard to any limitations on exercises of the Notes and the Warrants.
          f. “Additional Registration Statement” means a registration statement
or registration statements of the Company filed under the 1933 Act covering any
Additional Registrable Securities.
          g. “Additional Required Registration Amount” means any Cutback Shares
not previously included on a Registration Statement, all subject to adjustment
as provided in Section 2(f), without regard to any limitations on exercises of
the Notes and the Warrants.
          h. “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.
          i. “Cutback Shares” means any of the Initial Required Registration
Amount (without regard to clause (II) in the definition thereof) of Registrable
Securities not included in all Registration Statements previously declared
effective hereunder as a result of a limitation on the maximum number of shares
of Common Stock of the Company permitted by the staff of the SEC to be
registered pursuant to Rule 415. For the purpose of determining the Cutback
Shares, in order to determine any applicable Required Registration Amount, first
the Warrant Shares shall be excluded on a pro rata basis until all of the
Warrant Shares have been excluded, then the Common Shares shall be excluded on a
pro rata basis until all of the Common Shares have been excluded and lastly the
Amended Conversion Shares shall be excluded on a pro rata basis until all of the
Amended Conversion Shares have been excluded.
          j. “Effective Date” means the Initial Effective Date and the
Additional Effective Date, as applicable.
          k. “Effectiveness Deadline” means the Initial Effectiveness Deadline
and the Additional Effectiveness Deadline, as applicable.
          l. “Initial Effective Date” means the date that the Registration
Statement has been declared effective by the SEC.
          m. “Initial Effectiveness Deadline” means the date which is 365 days
after the Initial Closing Date (as defined in the Securities Purchase
Agreement).

 

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          n. “Initial Registrable Securities” means (i) the Conversion Shares
issued or issuable upon conversion of the Notes, (ii) the Interest Shares issued
or issuable with respect to the Notes, (iii) the Warrant Shares issued or
issuable upon exercise of the Warrants, (iv) the Common Shares and (v) any
capital stock of the Company issued or issuable, with respect to the Notes, the
Conversion Shares, the Interest Shares, the Warrant Shares, the Warrants or the
Common Shares as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
exercises of the Warrants.
          o. “Initial Required Registration Amount” means (I) 120% of the sum of
(w) the number of Conversion Shares issued and issuable pursuant to the Notes as
of the trading day immediately preceding the applicable date of determination,
(x) the number of Warrant Shares issued and issuable pursuant to the Warrants as
of the trading day immediately preceding the applicable date of determination,
(y) the maximum number of Interest Shares issued or issuable pursuant to the
terms of the Notes as of the trading date immediately preceding the applicable
date of determination and (z) the number of Common Shares issued as of the
trading day immediately preceding the applicable date of determination,
excluding the 144 Common Shares (as defined in the Securities Purchase
Agreement), subject to adjustment as provided in Section 2(f), without regard to
any limitations on conversions or redemptions of the Notes or exercises of the
Warrants or (II) such other amount as may be required by the staff of the SEC
pursuant to Rule 415.
          p. “Initial Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering the
Initial Registrable Securities.
          q. “Investor” means a Buyer or any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement in accordance with the
requirements of the Transaction Documents and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9 and any transferee or
assignee thereof to whom a transferee or assignee assigns its rights under this
Agreement in accordance with the requirements of the Transaction Documents and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 9.
          r. “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
          s. “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 and the declaration or ordering by the SEC of the effectiveness of such
Registration Statement(s).
          t. “Registrable Securities” means the Initial Registrable Securities
and the Additional Registrable Securities. As to any particular Registrable
Securities, they shall cease to be Registrable Securities when they (i) have
been sold pursuant to an effective registration statement or in compliance with
Rule 144 or (ii) are eligible to be sold pursuant to Rule 144(k) or any similar
rule then in force.
          u. “Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering the
Registrable Securities.
          v. “Required Holders” means the holders of at least a majority of the
Registrable Securities.
          w. “Required Registration Amount” means either the Initial Required
Registration Amount or the Additional Required Registration Amount, as
applicable.
          x. “Rule 415” means Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a continuous or delayed basis.
          y. “SEC” means the United States Securities and Exchange Commission.

 

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     2. Registration.
          a. Mandatory Registration. The Company shall prepare, and, as soon as
practicable after the Initial Closing Date but in no event later than the
earlier to occur of (i) forty-five (45) days after the Company obtains the
Stockholder Approval (as defined in the Securities Purchase Agreement) and
(ii) March 3, 2008, file with the SEC the Initial Registration Statement on Form
S-3, if available, covering the resale of all of the Initial Registrable
Securities. In the event that Form S-3 is unavailable to the Company for such a
registration, the Company shall use such other form as is available for such a
registration on another appropriate form reasonably acceptable to the Required
Holders, subject to the requirements of Section 2(e). The Initial Registration
Statement prepared pursuant hereto shall register for resale at least that
number of shares of Common Stock equal to the Initial Required Registration
Amount determined as of the date such Initial Registration Statement is
initially filed with the SEC. The Initial Registration Statement shall contain
(except if otherwise directed by the Required Holders or the SEC) the “Selling
Stockholders” and “Plan of Distribution” sections in substantially the form
attached hereto as Exhibit B. The Company shall use its best efforts to have the
Initial Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Initial Effectiveness Deadline. By
9:30 am on the Business Day following the Initial Effective Date, the Company
shall file with the SEC in accordance with Rule 424 under the 1933 Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement.
          b. Additional Mandatory Registrations. The Company shall prepare, and,
as soon as practicable but in no event later than the Additional Filing
Deadline, file with the SEC Additional Registration Statements on Form S-3
covering the resale of all of the Additional Registrable Securities not
previously registered on an Additional Registration Statement hereunder. To the
extent the staff of the SEC does not permit the Additional Required Registration
Amount to be registered on an Additional Registration Statement, the Company
shall file Additional Registration Statements successively seeking to register
on each such Additional Registration Statement the maximum number of remaining
Additional Registrable Securities until the Additional Required Registration
Amount has been registered with the SEC. In the event that Form S-3 is
unavailable for such a registration, the Company shall use such other form as is
available for such a registration on another appropriate form reasonably
acceptable to the Required Holders, subject to the provisions of Section 2(e).
Each Additional Registration Statement prepared pursuant hereto shall register
for resale at least that number of shares of Common Stock equal to the
Additional Required Registration Amount as of the date the Registration
Statement is initially filed with the SEC. Each Additional Registration
Statement shall contain (except if otherwise directed by the Required Holders or
the SEC) the “Selling Stockholders” and “Plan of Distribution” sections in
substantially the form attached hereto as Exhibit B. The Company shall use its
best efforts to have each Additional Registration Statement declared effective
by the SEC as soon as practicable, but in no event later than the Additional
Effectiveness Deadline. By 9:30 a.m. New York time on the date following the
Additional Effective Date, the Company shall file with the SEC in accordance
with Rule 424 under the 1933 Act the final prospectus to be used in connection
with sales pursuant to such Registration Statement.
          c. Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and any increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Investor’s Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities covered by such Registration Statement
shall be allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement. The Company shall not include any securities other than
Registrable Securities (other than (i) on the Initial Registration Statement,
the shares described on Schedule 2(c)(i) and (ii) on the Additional Registration
Statement, the shares described on Schedule 2(c)(ii)) without the prior written

 

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consent of the Required Holders.
          d. Legal Counsel. Subject to Section 5 hereof, the Required Holders
shall have the right to select one legal counsel to review and participate in
any registration pursuant to this Section 2 (“Legal Counsel”), which shall be
Schulte Roth & Zabel LLP or such other counsel as thereafter designated by the
Required Holders. The Company and Legal Counsel shall reasonably cooperate with
each other in performing the Company’s obligations under this Agreement.
          e. Ineligibility for Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the Required
Holders and (ii) undertake to register the Registrable Securities on Form S-3 as
soon as such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.
          f. Sufficient Number of Shares Registered. In the event the number of
shares available under a Registration Statement filed pursuant to Section 2(a)
is insufficient to cover all of the Registrable Securities required to be
covered by such Registration Statement or an Investor’s allocated portion of the
Registrable Securities pursuant to Section 2(c), the Company shall amend the
applicable Registration Statement, or file a new Registration Statement (on the
short form available therefor, if applicable), or both, so as to cover at least
the Required Registration Amount as of the trading day immediately preceding the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15) days
after the necessity therefor arises. The Company shall use its best efforts to
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof. For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be deemed “insufficient to cover all of the Registrable Securities” if at any
time the number of shares of Common Stock available for resale under the
Registration Statement is less than the product determined by multiplying
(i) the Required Registration Amount as of such time by (ii) 0.90. The
calculation set forth in the foregoing sentence shall be made without regard to
any limitations on the conversion of the Notes or the exercise of the Warrants
and such calculation shall assume that the Notes are then convertible into
shares of Common Stock at the then prevailing Conversion Rate (as defined in the
Notes) and that the Warrants are then exercisable for shares of Common Stock at
the then prevailing Exercise Price (as defined in the Warrants).
          g. Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement. If (i) (A) the Additional Registration Statement is not
filed with the SEC on or before the Additional Filing Deadline (a “Filing
Failure”) or (B) a Registration Statement covering all of the Registrable
Securities required to be covered thereby and required to be filed by the
Company pursuant to this Agreement is not declared effective by the SEC on or
before the respective Effectiveness Deadline (an “Effectiveness Failure”) or
(ii) on any day after the Effective Date sales of all of the Registrable
Securities required to be included on such Registration Statement cannot be made
for any reason (other than during an Allowable Grace Period (as defined in
Section 3(q)) pursuant to such Registration Statement (including, without
limitation, because of a failure to keep such Registration Statement effective,
to disclose such information as is necessary for sales to be made pursuant to
such Registration Statement or to register, subject to the grace periods set
forth in Section 3(q) a sufficient number of shares of Common Stock to enable
resale of 100% of the shares of Common Stock issuable upon conversion of the
Notes and exercise of the Warrants without regard to limitations on conversion,
redemption and exercise of such Notes and Warrants and assuming such conversion,
redemption or exercise occurred on the date of the filing of the Registration
Statement or a suspension or delisting of the Common Stock on its principal
trading exchange or market) (a “Maintenance Failure”) then, as partial relief
for the damages to any holder by reason of any such delay in or reduction of its
ability to sell the underlying shares of Common Stock (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Company
shall pay to each holder of Registrable Securities relating to such Registration
Statement an amount in cash equal to one percent (1.0%) of the aggregate
Purchase Price (as such term is defined in the Securities Purchase Agreement) of
such Investor’s Registrable Securities included in such Registration Statement
on each of the following dates: (i) the day of a Filing Failure and on every
thirtieth day (pro rated for periods totaling less than thirty days) after a
Filing Failure until such Filing Failure is cured; (ii) the day of an
Effectiveness Failure and on every thirtieth day (pro rated for periods totaling
less than thirty days) after an Effectiveness Failure until such Effectiveness
Failure is cured; and (iii) the initial day of a Maintenance Failure and on
every thirtieth day (pro rated for periods totaling less than thirty days) after
a Maintenance Failure until such Maintenance Failure is cured; provided,
however, that in no event shall the Company be liable for more than one percent
(1%) of penalties during any thirty day period or for multiple events during any
thirty day period. The payments to which a holder shall be entitled pursuant to
this Section 2(g) are referred to herein as “Registration Delay Payments.”
Registration Delay Payments shall be paid on the day of the Filing Failure,
Effectiveness Failure and the initial day of a Maintenance Failure, as
applicable, and thereafter on the earlier of (I) the thirtieth day after the
event or failure giving rise to the Registration Delay Payments has occurred and
(II) the third Business Day after the event or failure giving rise to the
Registration Delay Payments is cured. In the event the Company fails to make
Registration Delay Payments in a timely manner, such Registration Delay Payments
shall bear interest at the rate of one percent (1.0%) per month (prorated for
partial months) until paid in full. The parties agree that the Company will not
be liable for Registration Delay Payments under this Section in respect of the
Warrants.

 

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     3. Related Obligations.
     At such time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Section 2(a), 2(b), 2(e) or 2(f), and subject to any
Allowable Grace Periods, the Company will use its best efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:
          a. The Company shall submit to the SEC, within two (2) Business Days
after the Company learns that no review of a particular Registration Statement
will be made by the staff of the SEC or that the staff has no further comments
on a particular Registration Statement, as the case may be, a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 48 hours after the submission of such request. Subject to
Allowable Grace Periods, the Company shall keep each Registration Statement
effective pursuant to Rule 415 at all times until the earlier of (i) the date as
of which the Investors may sell all of the Registrable Securities covered by
such Registration Statement pursuant to Rule 144(k) (or any successor thereto)
promulgated under the 1933 Act or (ii) the date on which the Investors shall
have sold all of the Registrable Securities covered by such Registration
Statement (the “Registration Period”). The Company shall ensure that each
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein (in the case of prospectuses, in the
light of the circumstances in which they were made) not misleading.
          b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-Q, Form 10-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934 Act”),
the Company shall have incorporated such report by reference into such
Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement such
Registration Statement.

 

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          c. The Company shall (A) permit Legal Counsel to review and comment
upon (i) a Registration Statement at least three (3) Business Days prior to its
filing with the SEC and (ii) all amendments and supplements to all Registration
Statements (except for any periodic reports under the 1934 Act) within a
reasonable number of days prior to their filing with the SEC, and (B) not file
any Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects; provided, however, that no liquidated damages
under Section 2 shall be due to any Investor if Legal Counsel shall have
unreasonably objected to the filing or effectiveness of any Registration
Statements such as to delay its filing or effectiveness. The Company shall not
submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval of
Legal Counsel, which consent shall not be unreasonably withheld. The Company
shall furnish to Legal Counsel, without charge, (i) copies of any correspondence
from the SEC or the staff of the SEC to the Company or its representatives
relating to any Registration Statement, (ii) promptly after the same is prepared
and filed with the SEC, one copy of any Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor (if not
available pursuant to Rule 424(b)), and all exhibits. The Company shall
reasonably cooperate with Legal Counsel in performing the Company’s obligations
pursuant to this Section 3.
          d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i) if
the Company shall not have filed a final prospectus in accordance with Rule 424
per Section 2(a) or 2(b), as applicable, upon the effectiveness of any
Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (ii) such other
documents, including copies of any preliminary or final prospectus, as such
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
          e. The Company shall use its best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale by
Investors of the Registrable Securities covered by a Registration Statement
under such other securities or “blue sky” laws of all applicable jurisdictions
in the United States, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify Legal Counsel and each Investor
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of notice of the
initiation or threatening of any proceeding for such purpose.
          f. The Company shall notify Legal Counsel and each Investor in writing
of the happening of any event, as promptly as practicable after becoming aware
of such 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
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (provided that in no event shall such notice contain
any material, nonpublic information), and, subject to Section 3(q), promptly
prepare a supplement or amendment to such Registration Statement to correct such
untrue statement or omission. The Company shall also promptly notify Legal
Counsel and each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification of
such effectiveness shall be delivered to Legal Counsel and each Investor by
facsimile on the same day of such effectiveness and by overnight mail) and
(ii) of the Company’s reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.

 

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          g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
          h. To the extent any Investor is deemed, alleged or reasonably
believes may be alleged, to be an underwriter, at the reasonable request of any
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.
          i. To the extent any Investor is deemed, alleged or reasonably
believes may be alleged, to be an underwriter, the Company shall make available
for inspection by (i) any Investor, (ii) Legal Counsel and (iii) one firm of
accountants or other agents retained by the Investors (collectively, the
“Inspectors”), all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree to hold in strict confidence and shall not make any disclosure (except to
an Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other Transaction Document. Each Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing herein (or in any
other confidentiality agreement between the Company and any Investor) shall be
deemed to limit the Investors’ ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and regulations.
          j. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary or advisable to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary or
advisable to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement (provided that in the case of clauses (i) and (ii) such Investor shall
be consulted by the Company in connection with any such release or other
disclosure prior to its release). The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to such Investor and allow such Investor, at
the Investor’s expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.

 

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          k. The Company shall use its best efforts either to (i) cause all of
the Registrable Securities covered by a Registration Statement to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all of the Registrable Securities covered by a
Registration Statement on either The NASDAQ Global Market or The NASDAQ Global
Select Market or (iii) if, despite the Company’s best efforts to satisfy the
preceding clauses (i) and (ii), the Company is unsuccessful in satisfying the
preceding clauses (i) or (ii), to secure the inclusion for quotation on The
NASDAQ Capital Market or the NASD’s OTC Bulletin Board for such Registrable
Securities and, without limiting the generality of the foregoing, to use its
best efforts to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. (“NASD”) as such with respect
to such Registrable Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(k).
          l. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered and resold pursuant to a
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the Investors may reasonably request and
registered in such names as the Investors may request.
          m. If requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as an Investor reasonably requests to be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being offered or sold, the purchase price being paid therefor and any
other terms of the offering of the Registrable Securities to be sold in such
offering; (ii) as soon as practicable make all required filings of such
prospectus supplement or post-effective amendment after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) as soon as practicable, supplement or make amendments to
any Registration Statement if reasonably requested by an Investor holding any
Registrable Securities.
          n. The Company shall use its best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
          o. The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
          p. Within two (2) Business Days after a Registration Statement which
covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.
          q. Notwithstanding anything to the contrary herein, at any time after
the Effective Date, the Company may delay the disclosure of material, non-public
information concerning the Company the disclosure of which at the time is not,
in the good faith opinion of the Board of Directors of the Company (following
consultation with its counsel), in the best interest of the Company (a “Grace
Period”); provided, that the Company shall promptly (i) notify the Investors in
writing that such determination has been made (provided that in each notice the
Company will not disclose the content of such material, non-public information
to the Investors) and the date on which the Grace Period will begin, and
(ii) notify the Investors in writing of the date on which the Grace Period ends;
and, provided further, that during any three hundred sixty five (365) day period
such Grace Periods shall not exceed an aggregate of twenty (20) days and the
first day of any Grace Period must be at least two (2) trading days after the
last day of any prior Grace Period (each, an “Allowable Grace Period”). During
an Allowable Grace Period, the Investors will cease all sales under the
applicable Registration Statement until the end of such Allowable Grace Period.
For purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Investors receive the notice referred to
in clause (i) and shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred to in such
notice. The provisions of Section 3(g) hereof shall not be applicable during the
period of any Allowable Grace Period. Upon expiration of the Grace Period, the
Company shall again be bound by the first sentence of Section 3(f) with respect
to the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the contrary,
the Company shall cause its transfer agent to deliver unlegended shares of
Common Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the applicable
Registration Statement (unless an exemption from such prospectus delivery
requirement exists), prior to the Investor’s receipt of the notice of a Grace
Period and for which the Investor has not yet settled.

 

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     4. Obligations of the Investors.
          a. At least five (5) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each Investor
in writing of the information the Company requires from each such Investor if
such Investor elects to have any of such Investor’s Registrable Securities
included in such Registration Statement. It shall be a condition precedent to
the obligations of the Company to complete the registration pursuant to this
Agreement, and any time deadlines for the Company hereunder shall be extended
for the number of days an Investor does not comply with this Section 4, with
respect to the Registrable Securities of a particular Investor that such
Investor shall furnish to the Company a “Selling Stockholder Questionnaire”, in
the form attached hereto as Exhibit C, and such other 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 Investor, by such Investor’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 Investor has notified the Company in writing of
such Investor’s election to exclude all of such Investor’s Registrable
Securities from such Registration Statement.
          c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor’s receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.
          d. Each Investor covenants and agrees that it will comply with the
prospectus delivery requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to the Registration Statement.
     5. Expenses of Registration.
     All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company, shall be paid by the Company. The Company shall also
reimburse the Investors for the fees and disbursements of Legal Counsel in
connection with registration, filing or qualification pursuant to Sections 2 and
3 of this Agreement which amount shall be limited to $15,000.

 

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     6. Indemnification.
     In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
          a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, members, partners, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each, an “Indemnified Person”), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable
attorneys’ fees, amounts paid in settlement or expenses, joint or several,
(collectively, “Claims”) incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened, whether or
not an indemnified party is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, “Violations”). Subject to Section 6(c), the Company shall
reimburse the Indemnified Persons, promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(d) and (ii) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.

 

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          b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement and each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act (each,
an “Indemnified Party”), against any Claim or Indemnified Damages to which any
of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(c), such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9.
          c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding at least a majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

 

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          d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
          e. No Person involved in the sale of Registrable Securities who is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) in connection with such sale shall be entitled to
indemnification from any Person involved in such sale of Registrable Securities
who is not guilty of fraudulent misrepresentation.
          f. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
     7. Contribution.
     To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable
Securities, which Person is guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) in connection with such sale, shall be
entitled to contribution from any Person involved in such sale of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (iii)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities pursuant to such Registration Statement.
     8. Reports Under the 1934 Act.
     With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investors to sell securities of the Company
to the public without registration (“Rule 144”), the Company agrees, for so long
as an Investor holds Notes, Warrants, Common Shares (as defined in the
Securities Purchase Agreement) or Registrable Securities, to:
          a. make and keep public information available, as those terms are
understood and defined in Rule 144;
          b. file with the SEC in a timely manner (except as noted in Schedule
4(c) of the Securities Purchase Agreement) all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements and the filing of such reports and
other documents is required for the applicable provisions of Rule 144; and
          c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company, if
true, that it has complied with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act, (ii) a copy of the most recent annual report of the
Company and such other reports and documents so filed by the Company (but only
if such reports are not publicly available on the EDGAR System) and (iii) such
other information as may be reasonably requested to permit the Investors to sell
such securities pursuant to Rule 144 without registration.
     9. Assignment of Registration Rights.
     The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of such Investor’s Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement (including the furnishing by the Investor to
the Company of an opinion of counsel reasonably acceptable to the Company, prior
to such transfer, that such Registrable Securities may be so transferred in a
transaction that does not require registration under the 1933 Act).

 

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     10. Amendment of Registration Rights.
     Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
     11. Miscellaneous.
          a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the such record owner of such Registrable Securities.
          b. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. Each Investor shall provide notice in writing to the
Company of any change in address, which notice shall be sent by the Company to
all the other Investors. The addresses and facsimile numbers for such
communications shall be:

 

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If to the Company:
The Allied Defense Group, Inc.
8000 Towers Crescent Drive
Suite 260
Vienna, Virginia 22182
Telephone: (703) 847-5268
Facsimile: (703) 847-5334
Attention: Chief Financial Officer
With a copy to:
Baxter, Baker, Sidle, Conn & Jones
Sun Trust Building, Suite 2100
120 E. Baltimore Street
Baltimore, Maryland 21202
Telephone: (410) 230-3800
Facsimile: (410) 230-3801
Attention: James E. Baker, Jr.
If to Legal Counsel:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Eleazer N. Klein, Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
          c. 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.
          d. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of
the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

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          e. This Agreement, the other Transaction Documents (as defined in the
Securities Purchase Agreement) and the instruments referenced herein and therein
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.
          f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.
          g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
          h. This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
          i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
          j. All consents and other determinations required to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by the Required Holders.
          k. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
          l. This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
          m. The obligations of each Buyer hereunder are several and not joint
with the obligations of any other Buyer, and no provision of this Agreement is
intended to confer any obligations on any Buyer vis-à-vis any other Buyer.
Nothing contained herein, and no action taken by any Buyer pursuant hereto,
shall be deemed to constitute the Buyers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Buyers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated herein.
* * * * * *

 

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
COMPANY:
THE ALLIED DEFENSE GROUP, INC.
By:                                                            
Name:
Title:
     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
BUYERS:
KINGS ROAD INVESTMENTS LTD.
By:                                                             
Name:
Title:
     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
PORTSIDE GROWTH & OPPORTUNITY FUND
By:                                                             
Name:
Title:
     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
CASTLERIGG MASTER INVESTMENTS LTD.
By:                                                             
Name:
Title:
     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
LB I GROUP INC.
By:                                                             
Name:
Title:

 

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SCHEDULE OF BUYERS

                  Buyer’s Representative’s     Buyer’s Address   Address Buyer  
and Facsimile Number   and Facsimile Number
 
            c/o Polygon Investment Partners LP    
 
  399 Park Avenue, 22nd Floor    
 
  New York NY 10022   Schulte Roth & Zabel LLP
 
  Attention: Erik M.W. Caspersen and   919 Third Avenue
 
  Brandon L. Jones   New York, New York 10022
 
  Facsimile: (212) 359-7303   Attn: Eleazer Klein, Esq.
Kings Road
  Telephone: (212) 359-7300   Facsimile: (212) 593-5955
Investments Ltd.
  Residence: Cayman Islands   Telephone: (212) 756-2000
 
            c/o Ramius Capital Group, L.L.C.    
 
  666 Third Avenue, 26th Floor    
 
  New York, New York 10017    
 
  Attention: Jeffrey Smith    
 
  Owen Littman    
 
  Facsimile: (212) 845-7999    
 
                                (212) 845-7995    
 
  Telephone: (212) 845-7955    
Portside Growth &
                                (212) 201-4841    
Opportunity Fund
  Residence: Cayman Islands   N/A
 
            c/o Sandell Asset Management    
 
  40 West 57th St    
 
            26th Floor   McDermott Will & Emery LLP
 
  New York, NY 10019   340 Madison Avenue
 
  Attention: Cem Hacioglu / Matthew Pliskin   New York, New York 10173-1922
 
  Telephone: 212-603-5700   Attn: Stephen Older, Esq.
Castlerigg Master
  Fax: 212-603-5710   Facsimile: (212) 547-5444
Investments Ltd.
  Residence: British Virgin Islands   Telephone: (212) 547-5649
 
            c/o Lehman Brothers Inc.    
 
  399 Park Ave    
 
  NY, NY 10022    
 
  Attention: Will Yelsits    
LB I Group Inc.
  Eric Salzman   N/A

 

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SCHEDULE 2(c)(i)
     Shares includable in Initial Registration Statement:

                 
LB I Group Inc.
    41,739     Common Stock
Halcyon/Sliska Offshore Management LLC*
    33,000     Common Stock
Patriot Capital Funding, Inc.
    28,000     Warrants
Cowen and Company, LLC
    41,793     Warrants

 

*   Including any assignee of such common shareholders rights.

SCHEDULE 2(c)(ii)
Shares and Warrants Includible in Additional Registration Statement

                 
Pirate Capital LLC*
    261,261     Common Stock
Wynnefield Capital, Inc.*
    64,000     Common Stock

To the extent shares or warrants described in Schedule 2(c)(i) hereof are not
included on the Initial Registration Statement, such shares and warrants are
incorporated herein by reference.
 

*   Including any assignee of such common shareholders rights.

 

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EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Mellon Investor Services, LLC
85 Challenger Road
Ridgefield, New Jersey 07660
     Re: The Allied Defense Group, Inc.
Ladies and Gentlemen:
     [We are][I am] counsel to The Allied Defense Group, Inc., a Delaware
corporation (the “Company”), and have represented the Company in connection with
that certain Securities Purchase Agreement (the “Securities Purchase Agreement”)
entered into by and among the Company and the buyers named therein
(collectively, the “Holders”) pursuant to which the Company issued to the
Holders senior secured convertible notes (the “Notes”) convertible into the
Company’s common stock, $0.10 par value per share (the “Common Stock”) and
warrants exercisable for shares of Common Stock (the “Warrants”). Pursuant to
the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon conversion of the
Notes, the shares of Common Stock issuable as Interest Shares pursuant to the
Notes, the shares of Common Stock issuable upon exercise of the Warrants and the
Common Shares, under the Securities Act of 1933, as amended (the “1933 Act”). In
connection with the Company’s obligations under the Registration Rights
Agreement, on           , 200  , the Company filed a Registration Statement on
Form S-3 (File No. 333-          ) (the “Registration Statement”) with the
Securities and Exchange Commission (the “SEC”) relating to the Registrable
Securities which names each of the Holders as a selling stockholder thereunder.
     In connection with the foregoing, [we][I] advise you that a member of the
SEC’s staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.
     This letter shall serve as our standing confirmation to you of the
Company’s instruction that the shares of Common Stock are freely transferable by
the Holders pursuant to the Registration Statement. You need not require further
letters from us to effect any future legend-free issuance or reissuance of
shares of Common Stock to the Holders as contemplated by the Company’s
Irrevocable Transfer Agent Instructions dated June    , 2007.

         
CC:
  [LIST NAMES OF HOLDERS]   Very truly yours,
 
      [ISSUER’S COUNSEL]
 
      By:                     

 

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EXHIBIT B
SELLING STOCKHOLDERS
     The shares of common stock being offered by the selling stockholders are
those issuable to the Selling Stockholders upon conversion and/or redemption of
the Notes and upon exercise of the Warrants. For additional information
regarding the issuance of those Notes and warrants, see “Private Placement of
Notes and Warrants” above. We are registering the shares of common stock in
order to permit the selling stockholders to offer the shares for resale from
time to time. Except for the ownership of the Notes and Warrants issued pursuant
to the securities purchase agreement, the selling stockholders have not had any
material relationship with us within the past three years.
     The table below lists the selling stockholders and other information
regarding the beneficial ownership of the shares of common stock by each of the
selling stockholders. The second column lists the number of shares of common
stock beneficially owned by each selling stockholder, based on its ownership of
the Notes and Warrants, as of           , 200_, assuming conversion and/or
redemption of all convertible notes and exercise of the warrants held by the
selling stockholders on that date, without regard to any limitations on
conversions, redemptions or exercise.
     The third column lists the shares of common stock being offered by this
prospectus by the selling stockholders.
     In accordance with the terms of a registration rights agreement among the
Company and the selling stockholders, this prospectus generally covers the
resale of at least 120% of the sum of (i) the number of shares of common stock
issuable upon conversion of the Notes as of the trading day immediately
preceding the date the registration statement is initially filed with the SEC,
(ii) the maximum number of Interest Shares issuable pursuant to the terms of the
Notes as of the trading day immediately preceding the date the registration
statement is initially filed with the SEC, (iii) the number of shares of common
stock issuable upon exercise of the related Warrants as of the trading day
immediately preceding the date the registration statement is initially filed
with the SEC and (iv) ) the number of Common Shares issued as of the trading day
immediately preceding the date the registration statement is initially filed
with the SEC. Because the conversion price of the Notes and the exercise price
of the Warrants may be adjusted, the number of shares that will actually be
issued may be more or less than the number of shares being offered by this
prospectus. The fourth column assumes the sale of all of the shares offered by
the selling stockholders pursuant to this prospectus.

 

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     Under the terms of the Notes and the Warrants, a selling stockholder may
not convert the convertible notes or exercise the warrants to the extent such
conversion, redemption or exercise would cause such selling stockholder,
together with its affiliates, to beneficially own a number of shares of common
stock which would exceed 9.99% of our then outstanding shares of common stock
following such conversion, redemption or exercise, excluding for purposes of
such determination shares of common stock issuable upon conversion and/or
redemption of the Notes which have not been converted or redeemed and upon
exercise of the Warrants that have not been exercised. The number of shares in
the second column does not reflect this limitation. The selling stockholders may
sell all, some or none of their shares in this offering. See “Plan of
Distribution.”

                                      Maximum Number of         Number of Shares
  Shares to be Sold   Number of Shares     Owned Prior to   Pursuant to this  
Owned After Name of Selling Stockholder   Offering   Prospectus   Offering
Kings Road Investments Ltd. (1)
                       
Portside Growth & Opportunity Fund (2)
                       
Castlerigg Master Investments Ltd. (3)
                       
LB I Group Inc. (4)
                    0  

     (1) Kings Road Investments Ltd. (“Kings Road”) is a wholly-owned subsidiary
of Polygon Global Opportunities Master Fund (“Master Fund”). Polygon Investment
Partners LLP, Polygon Investment Partners LP and Polygon Investment Partners HK
Limited (the “Investment Managers”), Polygon Investments Ltd. (the “Manager”),
the Master Fund, Alexander Jackson, Reade Griffith and Paddy Dear share voting
and dispositive power of the securities held by Kings Road. The Investment
Managers, the Manager, Alexander Jackson, Reade Griffith and Paddy Dear disclaim
beneficial ownership of the securities held by Kings Road.
     (2) Ramius Capital Group, LLC (“Ramius Capital”) is the investment adviser
of Portside Growth and Opportunity Fund (“Portside”) and consequently has voting
control and investment discretion over securities held by Portside. Ramius
Capital disclaims beneficial ownership of the shares held by Portside. Peter A.
Cohen, Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon are the sole
managing members of C4S& Co., LLC, the sole managing member of Ramius Capital.
As a result, Messrs. Cohen, Stark, Strauss and Solomon may be considered
beneficial owners of any shares deemed to be beneficially owned by Ramius
Capital. Messrs. Cohen, Stark, Strauss and Solomon disclaim beneficial ownership
of these shares.
     (3) Sandell Asset Management Corp. is the investment manager of Castlerigg
Master Investment Ltd. (“Castlerigg”) and has shared voting and dispositive
power over the securities owned by Castlerigg. Sandell Asset Management Corp.
and Thomas E. Sandell, its sole shareholder, disclaim beneficial ownership of
the securities owned by Castlerigg.
     (4) LB I Group Inc. is an affiliate of a broker-dealer and has represented
to us that it is not acting as an underwriter in this offering. It purchased the
securities in the ordinary course of business, and at the time of the purchase
of the securities to be resold, it had no agreements or understandings, directly
or indirectly, with any person to distribute the securities. Lehman Brothers
Inc. is the parent company of LB I Group Inc. Lehman Brothers Holdings Inc., a
public reporting company, is the parent company of Lehman Brothers Inc. The
address for LB I Group Inc. is c/o Lehman Brothers Inc., 399 Park Avenue, New
York, New York 10022, Attn: Eric Salzman and Will Yelsits.

 

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PLAN OF DISTRIBUTION
     We are registering the Common Shares previously issued and the shares of
common stock issuable upon conversion of the Notes, as Interest Shares pursuant
to the terms of the Notes and upon exercise of the Warrants to permit the resale
of these shares of common stock by the holders of the Notes and Warrants from
time to time after the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling stockholders of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register
the shares of common stock.
     The selling stockholders may sell all or a portion of the shares of common
stock beneficially owned by them and offered hereby from time to time directly
or through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions or
agent’s commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions,

  •   on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;     •   in the
over-the-counter market;     •   in transactions otherwise than on these
exchanges or systems or in the over-the-counter market;     •   through the
writing of options, whether such options are listed on an options exchange or
otherwise;     •   ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;     •   block trades in which the
broker-dealer will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction;     •
  purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;     •   an exchange distribution in accordance with the rules of
the applicable exchange;     •   privately negotiated transactions;     •  
short sales;     •   sales pursuant to Rule 144;     •   broker-dealers may
agree with the selling securityholders to sell a specified number of such shares
at a stipulated price per share;     •   a combination of any such methods of
sale; and     •   any other method permitted pursuant to applicable law.

 

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     If the selling stockholders effect such transactions by selling shares of
common stock to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling stockholders or
commissions from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the shares of common stock or otherwise, the selling stockholders
may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of common stock in the course of hedging in
positions they assume. The selling stockholders may also sell shares of common
stock short and deliver shares of common stock covered by this prospectus to
close out short positions and to return borrowed shares in connection with such
short sales. The selling stockholders may also loan or pledge shares of common
stock to broker-dealers that in turn may sell such shares.
     The selling stockholders may pledge or grant a security interest in some or
all of the convertible notes, or warrants or shares of common stock owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time pursuant to this prospectus or any amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of
1933, as amended, amending, if necessary, the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholders also may transfer
and donate the shares of common stock in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.
     The selling stockholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be “underwriters”
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
     Under the securities laws of some states, the shares of common stock may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.
     There can be no assurance that any selling stockholder will sell any or all
of the shares of common stock registered pursuant to the shelf registration
statement, of which this prospectus forms a part.

 

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     The selling stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
     We will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be $[          ] in
total, including, without limitation, Securities and Exchange Commission filing
fees and expenses of compliance with state securities or “blue sky” laws;
provided, however, that a selling stockholder will pay all underwriting
discounts and selling commissions, if any. We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution. We may be indemnified by
the selling stockholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to us
by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreement, or we may be entitled
to contribution.
     Once sold under the shelf registration statement, of which this prospectus
forms a part, the shares of common stock will be freely tradable in the hands of
persons other than our affiliates.

 

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EXHIBIT C
SELLING STOCKHOLDER QUESTIONNAIRE
     The undersigned hereby provides the following information to the Company
and represents and warrants that such information is accurate:
1. Name.

  (a)   Full Legal Name of Selling Securityholder     (b)   Full Legal Name of
Registered Holder (if not the same as (a) above) through which Registrable
Securities Listed in Item 3 below are held:     (c)   Full Legal Name of Natural
Control Person (which means a natural person who directly or indirectly alone or
with others has power to vote or dispose of the securities covered by the
questionnaire):

2. Address for Notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
3. Beneficial Ownership of Registrable Securities:
     Type and Principal Amount of Registrable Securities beneficially owned:
4. Broker-Dealer Status:

  (a)   Are you a broker-dealer?

Yes     No

  (b)   Are you an affiliate of a broker-dealer?

Yes     No

  (c)   If you are an affiliate of a broker-dealer, do you certify that you
bought the Registrable Securities in the ordinary course of business, and at the
time of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?

Yes     No

 

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5. Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.
Except as set forth below in this Item 5, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
          Type and Amount of Other Securities beneficially owned by the Selling
Securityholder:
6. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.
          State any exceptions here:
The undersigned agrees to promptly notify the Company of any material
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof and prior to the Effective Date for the
Registration Statement.
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

         
   Dated:
  Beneficial Owner:    
 
  By:    
 
     
 
Name:
 
      Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND
QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
[                                                                                                                                                      ]