a public offering
and sale of securities of the Company (other than a Registration Statement on
Form S-4 or S-8 or any successor form for securities to be offered in a
transaction of the type referred to in Rule 145 under the Securities Act or to
employees of Company pursuant to any employee benefit plan, respectively).
"Warrants" shall mean the warrants to purchase shares of the Company's common
stock issued to the Purchasers on the date hereof.
2.
MANDATORY REGISTRATION.
WITHIN 60 DAYS
FROM THE DATE HEREOF, THE COMPANY SHALL FILE A REGISTRATION STATEMENT COVERING
THE RESALE OF THE REGISTRABLE SECURITIES AND SHALL THEREAFTER USE ITS BEST
EFFORTS TO EFFECT THE REGISTRATION UNDER THE SECURITIES ACT OF THE REGISTRABLE
SECURITIES FOR SALE WITHIN 90 DAYS AFTER THE DATE HEREOF, ALL TO THE EXTENT
REQUIRED TO PERMIT THE DISPOSITION OF THE REGISTRABLE SECURITIES SO REGISTERED
FOR A PERIOD OF UP TO TWO YEARS.
IN THE EVENT THE COMPANY FAILS TO HAVE THE
REGISTRATION STATEMENT DECLARED EFFECTIVE BY THE SEC WITHIN 60 DAYS FROM THE
DATE HEREOF (OR WITHIN 90 DAYS FROM THE DATE HEREOF IN THE EVENT THE SEC REVIEWS
THE REGISTRATION STATEMENT, HEREINAFTER THE "SCHEDULED EFFECTIVE DATE") THEN,
EXCEPT WHERE THE FAILURE TO MEET SUCH DEADLINE IS THE RESULT SOLELY OF ACTIONS
OR OMISSIONS BY THE HOLDERS IN VIOLATION OF THEIR DUTIES OR OBLIGATIONS
HEREUNDER OR IN THE PURCHASE AGREEMENT, THE COMPANY SHALL PAY EACH HOLDER FOR
EACH 30-DAY PERIOD THAT REGISTRATION STATEMENT REMAINS INEFFECTIVE AN AMOUNT
EQUAL TO TWO PERCENT (2%) OF THE ORIGINAL PURCHASE PRICE ATTRIBUTABLE TO THOSE
REGISTRABLE SECURITIES. THIS PENALTY SHALL BE PRO-RATED FOR ANY PORTION OF A
30-DAY PERIOD THAT THE REGISTRATION STATEMENT IS NOT EFFECTIVE AFTER THE
SCHEDULED EFFECTIVE DATE.
THE COMPANY SHALL PAY SUCH AMOUNT, AT THE END OF EACH
30-DAY PERIOD, ONE-HALF (1/2) IN CASH AND ONE-HALF (1/2) IN SHARES OF COMMON
STOCK VALUED AT $1.63 PER SHARE ON DEMAND BY A HOLDER OF REGISTRABLE SECURITIES
MADE AT ANY TIME DURING THE CONTINUANCE OR AFTER TERMINATION OF THIS
REGISTRATION DEFAULT.
3.
PIGGY-BACK REGISTRATION.
IF THE
COMPANY AT ANY TIME PROPOSES TO FILE A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT ON ANY FORM (OTHER THAN A REGISTRATION STATEMENT ON FORM S-4 OR
S-8 OR ANY SUCCESSOR FORM FOR SECURITIES TO BE OFFERED IN A
2
TRANSACTION OF THE TYPE REFERRED TO IN RULE 145 UNDER THE SECURITIES ACT OR TO
EMPLOYEES OF COMPANY PURSUANT TO ANY EMPLOYEE BENEFIT PLAN, RESPECTIVELY) FOR
THE GENERAL REGISTRATION OF SECURITIES (A "PIGGY-BACK REGISTRATION STATEMENT"),
IT WILL GIVE WRITTEN NOTICE TO ALL HOLDERS AT LEAST 15 DAYS BEFORE THE INITIAL
FILING WITH THE SEC OF SUCH PIGGY-BACK REGISTRATION STATEMENT, WHICH NOTICE
SHALL SET FORTH THE INTENDED METHOD OF DISPOSITION OF THE SECURITIES PROPOSED TO
BE REGISTERED BY COMPANY.
THE NOTICE SHALL OFFER TO INCLUDE IN SUCH FILING THE
AGGREGATE NUMBER OF SHARES OF REGISTRABLE SECURITIES AS SUCH HOLDERS MAY
REQUEST.
Each Holder desiring to have Registrable Securities registered under this
Section 3 shall advise Company in writing