Document:

cicn_ex42.htm

     

     

    Exhibit
4.2

    AMENDMENT NO.
1

    TO

    SHORT TERM CONVERTIBLE
PROMISSORY NOTE

    

    This Amendment No. 1 to Short Term
Convertible Promissory Note (this “Amendment”) is made
as of March 31, 2010, between Cicero Inc., a Delaware corporation (the “Company”), and
SOAdesk, LLC, a Delaware limited liability company (“Holder”).

    

    W
I T N E S S E T H:

    

    WHEREAS,
pursuant to that certain Asset Purchase Agreement, dated as of January 15, 2010,
between the Company and Holder, the Company delivered to Holder a $700,000
principal amount Short Term Convertible Promissory Note (the “Note”);
and

    

    WHEREAS,
the Company and Holder desire to amend the Note as set forth
herein.

    

    NOW,
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

    

    1.           Capitalized
terms used and not otherwise defined herein shall have the meanings given to
such terms in the Note.

    

    2.           The
“Maturity Date” of the Note is hereby extended to September 30,
2010.

    

    3.           Section
4.2 of the Note (“Mandatory
Prepayment”) is hereby amended by adding the following proviso to the end
of such Section:

    

    “; provided, that no
such proceeds shall be applied to pre-payment of this Note until one hundred
percent (100%) of the aggregate principal amount of, and any accrued interest
on, that certain $525,000 principal amount Short Term Convertible Promissory
Note, dated as of March 31, 2010, between the Company and Holder, shall have
been paid in full.”

    

    4.           Except
as specifically set forth herein, the Note and all of its terms and conditions
remain in full force and effect, and the Note is hereby ratified and confirmed
in all respects, except that on or after the date of this Amendment all
references in the Note to “this Note,” “hereto,” “hereof,” “hereunder,” or words
of like import shall mean the Note as amended by this Amendment.

    

    5.           This
Amendment may be executed in any number of counterparts, each of which shall be
deemed an original and such counterparts together shall constitute one and the
same instrument.

    
      
        
          

                                                                 

        

         

      

      
        1

        
          

        

      

      
         

        
          Exhibit
4.2

        

      

    

    6.           This
Amendment and all actions arising out of or in connection with this Amendment
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to the conflicts of law provisions
thereof.

     

    7.           This
Amendment shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto.

     

    

     

    [remainder of page intentionally left
blank; signature page follows]

     

    

     

    
      
        
          

                                                                 

        

         

      

      
        2

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the day and year first above written.

     

    
       

      
        
          	 	CICERO INC.	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ 	 
	 	 	Name:	 
	 	 	 	 
	 	 	Title: 	 
	 	 	 	 

        

      

       

       

      
        	
              	SOADESK, LLC	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	Name:	 
	 	 	 	 
	 	 	Title: 	 
	 

      

       

    

    

    

    

    

    

    

    

    Signature
Page to Amendment to Short Term Convertible Promissory Noteex4-1.htm

Exhibit 4.1

EXECUTION COPY

REGISTRATION RIGHTS AGREEMENT

 

 

BY AND AMONG

 

 

PACIFIC ASIA PETROLEUM, INC.

 

 

AND

 

 

CAMAC ENERGY HOLDINGS LIMITED

 

  

  

  

EXECUTION COPY

Table of Contents

 

 

 

 

	
ARTICLE I

DEFINITIONS

	
Page

	
Section 1.01                                Definitions 

	
1

	
Section 1.02                                Registrable Securities 

	
3

	
ARTICLE II

REGISTRATION RIGHTS

	  
	
Section 2.01                                Registration 

	
3

	
Section 2.02                                Piggyback Rights 

	
6

	
Section 2.03                                Underwritten Offering 

	
7

	
Section 2.04                                Sale Procedures 

	
8

	
Section 2.05                                Cooperation by Holders 

	
12

	
Section 2.06                                Restrictions on Public Sale by Holders of Registrable Securities 

	
12

	
Section 2.07                                Expenses 

	
12

	
Section 2.08                                Indemnification 

	
13

	
Section 2.09                                Rule 144 Reporting 

	
15

	
Section 2.10                                Transfer or Assignment of Registration Rights 

	
15

	
Section 2.11                                Limitation on Subsequent Registration Rights 

	
16

	
ARTICLE III

MISCELLANEOUS

	  
	
Section 3.01                                Communications 

	
16

	
Section 3.02                                Successor and Assigns 

	
16

	
Section 3.03                                Aggregation of Purchased Common Stock 

	
16

	
Section 3.04                                Recapitalization, Exchanges, Etc. Affecting the Common Stock 

	
16

	
Section 3.05                                Specific Performance 

	
17

	
Section 3.06                                Counterparts 

	
17

	
Section 3.07                                Headings 

	
17

	
Section 3.08                                Governing Law 

	
17

	
Section 3.09                                Severability of Provisions 

	
17

	
Section 3.10                                Entire Agreement 

	
17

	
Section 3.11                                Amendment 

	
17

	
Section 3.12                                No Presumption 

	
17

	
Section 3.13                                Obligations Limited to Parties to Agreement 

	
18

	
Section 3.14                                Interpretation 

	
18

 

 

  

i

  

EXECUTION COPY

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of April 7, 2010 by and between Pacific Asia Petroleum, Inc., a Delaware corporation (“PAPI”), and CAMAC Energy Holdings Limited, a Cayman Islands company (“CEHL”).

 

WHEREAS, this Agreement is made pursuant to that certain Purchase and Sale Agreement, dated as of November 18, 2009, as amended, by and among the Company, CEHL, CAMAC International (Nigeria) Limited, a company incorporated in the Federal Republic of Nigeria and a wholly-owned subsidiary of CEHL; and Allied Energy PLC (formerly, Allied Energy Resources Nigeria Limited, a company incorporated in the Federal Republic of Nigeria and a wholly-owned subsidiary of CEHL (the “Purchase Agreement”);

 

WHEREAS, PAPI has agreed to provide the registration and other rights set forth in this Agreement for the benefit of CEHL pursuant to the Purchase Agreement; and

 

WHEREAS, it is a condition to the obligations of CEHL under the Purchase Agreement that this Agreement be executed and delivered.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, the parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                      Definitions.  Capitalized terms used herein without definition shall have the meanings given to them in the Purchase Agreement.  The terms set forth below are used herein as so defined:

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 (as defined below).

 

“Agreement” has the meaning specified therefor in the introductory paragraph.

 

“CEHL” has the meaning specified therefor in the introductory paragraph of this Agreement.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, $0.001 par value per share.

 

“Consideration Shares” means the shares of Common Stock issued or issuable to CEHL pursuant to the Purchase Agreement, plus any shares of Common Stock issued as Liquidated Damages pursuant to this Agreement.

 

 

  

  

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“Effectiveness Period” has the meaning specified therefor in Section 2.01(a)(i) of this Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

 

“Holder Underwriter Registration Statement” has the meaning specified therefor in Section 2.04(o) of this Agreement.

 

“Included Registrable Securities” has the meaning specified therefor in Section 2.02(a) of this Agreement.

 

“Liquidated Damages” has the meaning specified therefor in Section 2.01(a)(ii) of this Agreement.

 

“Liquidated Damages Date” has the meaning specified therefore in Section 2.01(a)(ii) of this Agreement.

 

“Liquidated Damages Multiplier” means the product of $2.25 times the number of Consideration Shares outstanding on the date that Liquidated Damages first begin to accrue.

 

“Losses” has the meaning specified therefor in Section 2.08(a) of this Agreement.

 

“Managing Underwriter” means, with respect to any Underwritten Offering, the book-running lead manager of such Underwritten Offering.

 

“Opt Out Notice” has the meaning specified therefor in Section 2.02(a) of this Agreement.

 

“PAPI” has the meaning specified therefor in the introductory paragraph.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Purchase Agreement” has the meaning specified therefor in the Recitals of this Agreement.

 

“Registrable Securities” means the Consideration Shares (and any shares of Common Stock issued as Liquidated Damages pursuant to this Agreement), and any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event, or any exercise price adjustment with respect to any of the securities referenced herein.

 

“Registration Expenses” has the meaning specified therefor in Section 2.07(a) of this Agreement.

 

 

  

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“Registration Statement” has the meaning specified therefor in Section 2.01(a)(i) of this Agreement.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Rule 158” means Rule 158 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Selling Expenses” has the meaning specified therefor in Section 2.07(a) of this Agreement.

 

“Selling Holder” means a Holder who is selling Registrable Securities pursuant to a registration statement.

 

“Underwritten Offering” means an offering (including an offering pursuant to a Registration Statement) in which Common Stock is sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a “bought deal” with one or more investment banks.

 

Section 1.02                      Registrable Securities.  Any Registrable Security will cease to be a Registrable Security when: (a) a registration statement covering such Registrable Security has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) such Registrable Security has been disposed of pursuant to any section of Rule 144 (or any similar provision then in force) under the Securities Act; (c) such Registrable Security can be disposed of without restriction (including, but not limited to, volume limitations) pursuant to Rule 144(k) (or any similar provision then in force) under the Securities Act; or (d) such Registrable Security has been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities.

 

ARTICLE II

 

REGISTRATION RIGHTS

 

Section 2.01                      Registration.

 

(a)           Registration.

 

(i)           Deadline To Go Effective.  As soon as practicable following the Closing, but in any event within 45 days of the Closing Date, PAPI shall prepare and file a registration statement under the Securities Act to permit the resale of the Registrable Securities from 

 

 

  

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time to time, including as permitted by Rule 415 under the Securities Act (or any similar provision then in force under the Securities Act) with respect to all of the Registrable Securities (the “Registration Statement”).  PAPI shall use its commercially reasonable efforts to cause the Registration Statement to become effective no later than 135 days following the Closing Date.  A Registration Statement filed pursuant to this Section 2.01 shall be on Form S-3 (except if PAPI is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith).  PAPI will use its commercially reasonable efforts to cause the Registration Statement filed pursuant to this Section 2.01 to be continuously effective under the Securities Act until the earlier of (i) the date as of which all such Registrable Securities are sold by the Purchasers or (ii) the date when such Registrable Securities become eligible for resale without restriction (including, but not limited to, volume limitations) under Rule 144(k) (or any similar provision then in force) under the Securities Act (the “Effectiveness Period”).  The Registration Statement when declared effective (including the documents incorporated therein by reference) shall comply as to form with all applicable requirements of the Securities Act and the Exchange Act and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  As provided in Section 2.01(d) of this Agreement, PAPI shall be required to file and maintain the effectiveness of as many registration statements as are necessary to register all of the Consideration Shares.

 

(ii)           Liquidated Damages.  If any Consideration Shares are not covered by the Registration Statement contemplated by Section 2.01(a) of this Agreement within 18 months of the Closing Date (the “Liquidated Damages Date”), then CEHL shall be entitled to a payment with respect to the Consideration Shares that are not covered by such Registration Statement, as liquidated damages and not as a penalty, of 0.25% of the Liquidated Damages Multiplier per 30-day period for the first 90 days following the Liquidated Damages Date, increasing by an additional 0.25% of the Liquidated Damages Multiplier per 30-day period for each subsequent 30 days, up to a maximum of 1.00% of the Liquidated Damages Multiplier per 30-day period (the “Liquidated Damages”).  There shall be no limitation on the aggregate amount of the Liquidated Damages payable by PAPI to CEHL under this Agreement.  The Liquidated Damages payable pursuant to the immediately preceding sentence shall be payable within ten (10) Business Days of the end of each such 30-day period.  Any Liquidated Damages shall be paid at CEHL’s election:  (i) in cash or immediately available funds; or (ii) in kind in the form of the issuance of additional Common Stock.  Upon any issuance of Common Stock as Liquidated Damages, PAPI shall promptly prepare and file an amendment to the Registration Statement prior to its effectiveness adding such Common Stock to such Registration Statement as additional Registrable Securities.  The determination of the number of shares of Common Stock to be issued as Liquidated Damages shall be equal to the amount of Liquidated Damages divided by the volume weighted average closing price of the Common Stock (as reported by NYSE Amex) for the ten (10) trading days immediately preceding the date on which the Liquidated Damages payment is due.  As soon as practicable following the date that the Registration Statement becomes effective, but in any event within two Business Days of such date, PAPI shall provide the Purchasers with written notice of the effectiveness of the Registration Statement.

 

 

  

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(b)           Delay Rights.  Notwithstanding anything to the contrary contained herein, PAPI may, upon written notice to any Selling Holder whose Registrable Securities are included in the Registration Statement, suspend such Selling Holder’s use of any prospectus which is a part of the Registration Statement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to the Registration Statement, but such Selling Holder may settle any such sales of Registrable Securities) if (i) PAPI is pursuing an acquisition, merger, reorganization, disposition or other similar transaction and PAPI determines in good faith that PAPI’s ability to pursue or consummate such a transaction would be materially adversely affected by any required disclosure of such transaction in the Registration Statement or (ii) PAPI has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of PAPI, would materially adversely affect PAPI; provided, however, in no event shall a Holder be suspended for a period that exceeds an aggregate of 30 days in any 90-day period or 90 days in any 365-day period.  No additional registration rights may be granted to any other Person that would be superior to the Purchasers’ registration rights.  Upon disclosure of such information or the termination of the condition described above, PAPI shall provide prompt notice to the Selling Holders whose Registrable Securities are included in the Registration Statement, shall promptly terminate any suspension of sales it has put into effect and shall take such other actions to permit registered sales of Registrable Securities as contemplated in this Agreement.

 

(c)           Additional Rights to Liquidated Damages.  If (i) the Holders shall be prohibited from selling their Registrable Securities under the Registration Statement as a result of a suspension pursuant to Section 2.01(b) of this Agreement in excess of the periods permitted therein or (ii) the Registration Statement is filed and declared effective but, during the Effectiveness Period, shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded by a post-effective amendment to the Registration Statement, a supplement to the prospectus or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or l5(d) of the Exchange Act, then, until the suspension is lifted or a post-effective amendment, supplement or report is filed with the Commission, but not including any day on which a suspension is lifted or such amendment, supplement or report is filed and declared effective, if applicable, PAPI shall owe the Holders an amount equal to the Liquidated Damages, following (x) the date on which the suspension period exceeded the permitted period under Section 2.01(b) of this Agreement or (y) the day after the Registration Statement ceased to be effective or failed to be useable for its intended purposes, as liquidated damages and not as a penalty; provided, however, and subject to Section 2.01(a)(ii) of this Agreement, PAPI shall not be required to pay Liquidated Damages with respect to Consideration Shares not covered by a Registration Statement.  For purposes of this Section 2.01(c), a suspension shall be deemed lifted on the date that notice that the suspension has been lifted is delivered to the Holders pursuant to Section 3.01 of this Agreement.

 

(d)           Claw-Back of Registrable Securities.  PAPI may exclude Registrable Securities from the Registration Statement if required by the Commission in order for the Commission to declare the Registration Statement effective; provided, however, that PAPI will use its commercially reasonable efforts to file a subsequent Registration Statement that includes the Registrable Securities excluded from the initial Registration Statement at such time as it may do so in accordance with the Securities Act as interpreted by the Commission, but in any event within six months of the effective date of the preceding Registration Statement, and PAPI will 

 

 

  

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use its commercially reasonable efforts to have such Registration Statement declared effective within a reasonable period of time after such filing.  With respect to any Registrable Securities that are not included in the initial Registration Statement or a subsequent Registration Statement within 18 months following the Closing Date, PAPI shall be required to pay the Purchasers the Liquidated Damages in accordance with Section 2.01(a)(ii) of this Agreement.

 

(e)           No Obligation For Primary Offering By Holders.  If the Commission deems the registration of any Registrable Securities to be a primary offering by PAPI or the Holders, and the Commission prohibits the use of Rule 415 under the Securities Act (or any similar provision then in force) to sell Registrable Securities on a delayed or continuous basis, then the Purchasers shall not be obligated to commit to any such primary offering to allow the Registration Statement to be declared effective by the Commission.

 

Section 2.02                      Piggyback Rights.

 

(a)           Participation.  If at any time PAPI proposes to file (i) a prospectus supplement to an effective shelf registration statement, other than the Registration Statement contemplated by Section 2.01 of this Agreement, or (ii) a registration statement, other than a shelf registration statement, in either case, for the sale of Common Stock in an Underwritten Offering for its own account and/or another Person, then as soon as practicable but not less than three Business Days prior to the filing of (x) any preliminary prospectus supplement relating to such Underwritten Offering pursuant to Rule 424(b) under the Securities Act, (y) the prospectus supplement relating to such Underwritten Offering pursuant to Rule 424(b) under the Securities Act (if no preliminary prospectus supplement is used) or (z) such registration statement, as the case may be, then PAPI shall give notice (including, but not limited to, notification by electronic mail) of such proposed Underwritten Offering to the Holders and such notice shall offer the Holders the opportunity to include in such Underwritten Offering such number of Registrable Securities (the “Included Registrable Securities”) as each such Holder may request in writing; provided, however, that if PAPI has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have a material adverse effect on the price, timing or distribution of the Common Stock in the Underwritten Offering, then the amount of Registrable Securities to be offered for the accounts of Holders shall be determined based on the provisions of Section 2.02(b) of this Agreement.  The notice required to be provided in this Section 2.02(a) to Holders shall be provided on a Business Day pursuant to Section 3.01 hereof and receipt of such notice shall be confirmed by such Holder.  Each such Holder shall then have three Business Days after receiving such notice to request inclusion of Registrable Securities in the Underwritten Offering, except that such Holder shall have one Business Day after such Holder confirms receipt of the notice to request inclusion of Registrable Securities in the Underwritten Offering in the case of a “bought deal”, “registered direct offering” or “overnight transaction” where no preliminary prospectus is used.  If no request for inclusion from a Holder is received within the specified time, such Holder shall have no further right to participate in such Underwritten Offering.  If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, PAPI shall determine for any reason not to undertake or to delay such Underwritten Offering, PAPI may, at its election, give written notice of such determination to the Selling Holders and, (x) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in

 

 

  

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connection with such terminated Underwritten Offering, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities for the same period as the delay in the Underwritten Offering.  Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such offering by giving written notice to PAPI of such withdrawal up to and including the time of pricing of such offering.  No Holder shall be entitled to participate in any such Underwritten Offering under this Section 2.02(a) unless such Holder (together with any Affiliate of such Holder) participating therein held at least $10,000,000 of Purchased Common Stock as of the Closing Date.  Notwithstanding the foregoing, any Holder may deliver written notice (an “Opt Out Notice”) to PAPI requesting that such Holder not receive notice from PAPI of any proposed Underwritten Offering; provided, that such Holder may later revoke any such notice.

 

(b)           Priority of Rights.  If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of Common Stock included in an Underwritten Offering involving Included Registrable Securities advises PAPI, or PAPI reasonably determines, that the total amount of Common Stock that the Selling Holders and any other Persons intend to include in such offering exceeds the number that can be sold in such offering without being likely to have a material adverse effect on the price, timing or distribution of the Common Stock offered or the market for the Common Stock, then the Common Stock to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter or Underwriters advises PAPI, or PAPI reasonably determines, can be sold without having such adverse effect, with such number to be allocated (i) first, to PAPI and (ii) second, to the Selling Holders who have requested participation in such Underwritten Offering.  The pro rata allocations for each such Selling Holder shall be the product of (a) the aggregate number of Common Stock proposed to be sold by all Selling Holders in such Underwritten Offering multiplied by (b) the fraction derived by dividing (x) the number of shares of Common Stock owned on the Closing Date by such Selling Holder by (y) the aggregate number of shares of Common Stock owned on the Closing Date by all Selling Holders participating in the Underwritten Offering.  All participating Selling Holders shall have the opportunity to share pro rata that portion of such priority allocable to any Selling Holder(s) not so participating.  As of the date of execution of this Agreement, there are no other Persons with Registration Rights relating to Common Stock other than as described in this Section 2.02(b).

 

Section 2.03                      Underwritten Offering.

 

(a)           Request for Underwritten Offering.  Any one or more Holders that collectively hold greater than $20,000,000 of Registrable Securities, based on a valuation price of $2.25 per share of Common Stock, may deliver written notice to PAPI that such Holders wish to dispose of an aggregate of at least $20,000,000 of Registrable Securities, based on the purchase price per unit under the Purchase Agreement, in an Underwritten Offering.  Upon receipt of any such written request, PAPI shall retain underwriters designated by the Holders, effect such sale through an Underwritten Offering, including entering into an underwriting agreement in customary form with the Managing Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.08, and take all reasonable actions as are requested by the Managing Underwriter or Underwriters to expedite or facilitate the disposition of such Registrable Securities, including 

 

 

  

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management’s participation in any roadshow or similar marketing effort on behalf of any such Holder.  Holders requesting an Underwritten Offering shall be responsible for all Selling Expenses.  The parties acknowledge that PAPI shall not be required to prepay any Selling Expenses on behalf of the requesting Holders and may discontinue any actions required to be taken hereby and shall not incur any penalty hereunder for such discontinuation if such Selling Expenses are not promptly paid when due by the requesting Holders.  The parties further agree that PAPI shall be entitled to obtain written agreement from the requesting Holders to pay any and all such Selling Expenses from the proceeds of the sales of such securities (i.e., from the flow of funds at the closing of such offering) prior to initiating any such Underwritten Offering.

 

(b)           General Procedures.  In connection with any Underwritten Offering under this Agreement, the Holders shall be entitled to select the Managing Underwriter or Underwriters with the consent of PAPI, which consent shall not be unreasonably withheld.  In connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, PAPI shall be obligated to enter into an underwriting agreement that contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of securities.  No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement.  Each Selling Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, PAPI to and for the benefit of such underwriters also be made to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations.  No Selling Holder shall be required to make any representations or warranties to or agreements with PAPI or the underwriters other than representations, warranties or agreements regarding such Selling Holder and its ownership of the securities being registered on its behalf, its intended method of distribution and any other representation required by Law.  If any Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by notice to PAPI and the Managing Underwriter; provided, however, that such withdrawal must be made up to and including the time of pricing of such Underwritten Offering.

 

Section 2.04                      Sale Procedures.  In connection with its obligations under this Article II, PAPI will, as expeditiously as possible:

 

(a)           prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Registration Statement;

 

(b)           if a prospectus supplement will be used in connection with the marketing of an Underwritten Offering from the Registration Statement and the Managing Underwriter at any time shall notify PAPI in writing that, in the sole judgment of such Managing Underwriter, inclusion of detailed information to be used in such prospectus supplement is of material 

 

 

  

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importance to the success of the Underwritten Offering of such Registrable Securities, use its commercially reasonable efforts to include such information in such prospectus supplement;

 

(c)           furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing the Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing the Registration Statement or such other registration statement or supplement or amendment thereto, and (ii) such number of copies of the Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement or other registration statement;

 

(d)           if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by the Registration Statement or any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request; provided, however, that PAPI will not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject;

 

(e)           promptly notify each Selling Holder and each underwriter of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered by any of them under the Securities Act, of (i) the filing of the Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to the Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto;

 

(f)           immediately notify each Selling Holder and each underwriter of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in the Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any other registration statement contemplated by this 

 

 

  

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Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by PAPI of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction.  Following the provision of such notice, PAPI agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

 

(g)           upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;

 

(h)           in the case of an Underwritten Offering, furnish upon request, (i) an opinion of counsel for PAPI dated the effective date of the applicable registration statement or the date of any amendment or supplement thereto, and a letter of like kind dated the date of the closing under the underwriting agreement, and (ii) a “cold comfort” letter, dated the date of the applicable registration statement or the date of any amendment or supplement thereto and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified PAPI’s financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “cold comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus and any prospectus supplement included therein) as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the underwriters in Underwritten Offerings of securities and such other matters as such underwriters or Selling Holders may reasonably request;

 

(i)           otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

 

(j)           make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and PAPI personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; provided, however, that PAPI need not disclose any such information to any such representative unless and until such representative has entered into or is otherwise subject to a confidentiality agreement with PAPI satisfactory to PAPI (including any confidentiality agreement referenced in Section 8.06 of the Purchase Agreement);

 

(k)           cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by PAPI are then listed;

 

 

  

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(l)           use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of PAPI to enable the Selling Holders to consummate the disposition of such Registrable Securities;

 

(m)           provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

 

(n)           enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of such Registrable Securities; and

 

(o)           if any Holder could reasonably be deemed to be an “underwriter”, as defined in Section 2(a)(11) of the Securities Act, in connection with the registration statement in respect of any registration of PAPI’s securities of any Holder pursuant to this Agreement, and any amendment or supplement thereof (any such registration statement or amendment or supplement a “Holder Underwriter Registration Statement”), cooperate with such Holder in allowing such Holder to conduct customary “underwriter’s due diligence” with respect to PAPI and satisfy its obligations in respect thereof.  In addition, at any Holder's request, PAPI will furnish to such Holder, on the date of the effectiveness of any Holder Underwriter Registration Statement and thereafter from time to time on such dates as such Holder may reasonably request, (i) a letter, dated such date, from PAPI’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 such Holder, and (ii) an opinion, dated as of such date, of counsel representing PAPI for purposes of such Holder Underwriter Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, including a standard “10b-5” opinion for such offering, addressed to such Holder.  PAPI will also permit legal counsel to such Holder to review and comment upon any such Holder Underwriter Registration Statement at least five Business Days prior to its filing with the Commission and all amendments and supplements to any such Holder Underwriter Registration Statement within a reasonable number of days prior to their filing with the Commission and not file any Holder Underwriter Registration Statement or amendment or supplement thereto in a form to which such Holder's legal counsel reasonably objects.

 

Each Selling Holder, upon receipt of notice from PAPI of the happening of any event of the kind described in Section 2.04(f) of this Agreement, shall forthwith discontinue disposition of the Registrable Securities until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.04(f) of this Agreement or until it is advised in writing by PAPI that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by PAPI, such Selling Holder will, or will request the managing underwriter or underwriters, if any, to deliver to PAPI (at PAPI’s expense) all copies in their possession or control, other than permanent file copies then in such Selling Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

 

If requested by a Purchaser, PAPI shall: (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as such Holder reasonably 

 

 

  

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requests to be included therein relating to the sale and distribution of Registrable Securities, including 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.

 

Section 2.05                      Cooperation by Holders.  PAPI shall have no obligation to include in the Registration Statement Common Stock of a Holder, or in an Underwritten Offering pursuant to Section 2.02 of this Agreement Common Stock of a Selling Holder, who has failed to timely furnish such information that, in the opinion of counsel to PAPI, is reasonably required in order for the registration statement or prospectus supplement, as applicable, to comply with the Securities Act.

 

Section 2.06                      Restrictions on Public Sale by Holders of Registrable Securities.  For a period of 365 days from the Closing Date, each Holder of Registrable Securities who is included in the Registration Statement agrees not to effect any public sale or distribution of the Registrable Securities during the 30-day period following completion of an Underwritten Offering of equity securities by PAPI (except as provided in this Section 2.06); provided, however, that the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the officers or directors or any other Unitholder of PAPI on whom a restriction is imposed in connection with such public offering.  In addition, the provisions of this Section 2.06 shall not apply with respect to a Holder that (A) owns less than $10,000,000 of Common Stock, based on a valuation price of $2.25 per share of Common Stock, (B) has delivered an Opt Out Notice to PAPI pursuant to Section 2.02 hereof or (C) has submitted a notice requesting the inclusion of Registrable Securities in an Underwritten Offering pursuant to Section 2.02 or Section 2.03(a) hereof but is unable to do so as a result of the priority provisions contained in Section 2.02(b) hereof.

 

Section 2.07                      Expenses.

 

(a)           Certain Definitions.  “Registration Expenses” means all expenses incident to PAPI’s performance under or compliance with this Agreement to effect the registration of Registrable Securities on the Registration Statement pursuant to Section 2.01 hereof or an Underwritten Offering covered under this Agreement, and the disposition of such securities, including, without limitation, all registration, filing, securities exchange listing and NYSE Amex fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of the Financial Industry Regulatory Authority (FINRA), transfer taxes and fees of transfer agents and registrars and all word processing fees, and the fees and disbursements of counsel and independent public accountants for PAPI  in connection with PAPI’s obligations under Section 2.01 of this Agreement.  “Selling Expenses” means all underwriting fees, discounts and selling commissions allocable to the sale of the Registrable Securities, and, in the case of an Underwritten Offering, duplicating and printing expenses and the fees and disbursements of counsel and independent public accountants for PAPI, including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance with Sections 2.03 and 2.04 of this Agreement.

 

 

 

  

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(b)           Expenses.  PAPI will pay all reasonable Registration Expenses as determined in good faith, including, in the case of an Underwritten Offering, whether or not any sale is made pursuant to such Underwritten Offering.  In addition, except as otherwise provided in Section 2.08 hereof, PAPI shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights hereunder.  Each Selling Holder shall pay all Selling Expenses in connection with any sale of its Registrable Securities hereunder.

 

Section 2.08                      Indemnification.

 

(a)           By PAPI.  In the event of an offering of any Registrable Securities under the Securities Act pursuant to this Agreement, PAPI will indemnify and hold harmless each Selling Holder thereunder, its directors and officers, and each underwriter, pursuant to the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, and its directors and officers, against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder, director, officer, underwriter or controlling Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, free writing prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse each such Selling Holder, its directors and officers, each such underwriter and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that PAPI will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in strict conformity with information furnished by such Selling Holder, its directors or officers or any underwriter or controlling Person in writing specifically for use in the Registration Statement or such other registration statement, or prospectus supplement, as applicable.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such Selling Holder, its directors or officers or any underwriter or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

 

(b)           By Each Selling Holder.  Each Selling Holder agrees severally and not jointly to indemnify and hold harmless PAPI, its directors and officers, and each Person, if any, who controls PAPI within the meaning of the Securities Act or of the Exchange Act, and its directors and officers, to the same extent as the foregoing indemnity from PAPI to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Registration Statement or any preliminary prospectus or final prospectus included therein, or any amendment or supplement thereto; provided, however, that the liability of each Selling Holder shall not be 

 

 

  

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greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification.

 

(c)           Notice.  Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under this Section 2.08.  In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof.  The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.08 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense or employ counsel reasonably acceptable to the indemnified party or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred.  Notwithstanding any other provision of this Agreement, no indemnifying party shall settle any action brought against an indemnified party with respect to which it is entitled to indemnification hereunder without the consent of the indemnified party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, the indemnified party.  Notwithstanding any other provision of this Agreement, no indemnified party shall settle any action brought against it with respect to which it is entitled to indemnification hereunder without the consent of the indemnifying party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, the indemnifying party.

 

(d)           Contribution.  If the indemnification provided for in this Section 2.08 is held by a court or government agency of competent jurisdiction to be unavailable to any indemnified party or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of such indemnified party on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder from the 

 

 

  

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sale of Registrable Securities giving rise to such indemnification.  The relative fault of the indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to herein.  The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss which is the subject of this paragraph.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

 

(e)           Other Indemnification.  The provisions of this Section 2.08 shall be in addition to any other rights to indemnification or contribution which an indemnified party may have pursuant to law, equity, contract or otherwise.

 

Section 2.09                      Rule 144 Reporting.  With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, PAPI agrees to use its commercially reasonable efforts to:

 

(a)           make and keep public information regarding PAPI available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after the date hereof;

 

(b)           file with the Commission in a timely manner all reports and other documents required of PAPI under the Securities Act and the Exchange Act at all times from and after the date hereof; and

 

(c)           so long as a Holder owns any Registrable Securities, furnish, unless otherwise not available at no charge by access electronically to the Commission’s EDGAR filing system, to such Holder forthwith upon request a copy of the most recent annual or quarterly report of PAPI, and such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.

 

Section 2.10                      Transfer or Assignment of Registration Rights.  The rights to cause PAPI to register Registrable Securities granted to CEHL by PAPI under this Article II may be transferred or assigned by CEHL to one or more transferee(s) or assignee(s) of such Registrable Securities; provided, however, that, (a) unless such transferee is an Affiliate of CEHL, each such transferee or assignee holds Registrable Securities representing at least $10,000,000 of the Registrable Securities, based on a valuation price of $2.25 per share of Common Stock, (b) PAPI is given written notice prior to any said transfer or assignment, stating the name and address of 

 

 

  

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each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned, and (c) each such transferee assumes in writing responsibility for its portion of the obligations of CEHL under this Agreement.

 

Section 2.11                      Limitation on Subsequent Registration Rights.  From and after the date hereof, PAPI shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities, (i) enter into any agreement with any current or future holder of any securities of PAPI that would allow such current or future holder to require PAPI to include securities in any registration statement filed by PAPI on a basis that is superior in any way to the piggyback rights granted to the Purchasers hereunder or (ii) grant registration rights to any other Person that would be superior to the Purchasers’ registration rights hereunder.

 

ARTICLE III

 

MISCELLANEOUS

 

Section 3.01                      Communications.  All notices and other communications provided for or permitted hereunder shall be made in writing by facsimile, electronic mail, courier service or personal delivery:

 

(a)           if to CEHL, to the address set forth in Section 12.1 of the Purchase Agreement in accordance with the provisions of this Section 3.01;

 

(b)           if to a transferee of  CEHL, to such Holder at the address provided pursuant to Section 2.10 hereof; and

 

(c)           if to PAPI at 250 East Hartsdale Ave., Suite 47, Hartsdale, New York 10530, (facsimile: 914.472.6793), notice of which is given in accordance with the provisions of this Section 3.01.

 

All such notices and communications shall be deemed to have been received: at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or electronic mail; and when actually received, if sent by courier service or any other means.

 

Section 3.02                      Successor and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein.

 

Section 3.03                      Aggregation of Purchased Common Stock.  All Common Stock held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

Section 3.04                      Recapitalization, Exchanges, Etc. Affecting the Common Stock.  The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all units of PAPI or any successor or assign of PAPI (whether by merger, consolidation, sale or acquisition of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, unit splits, recapitalizations and the like occurring after the date of this Agreement.

 

 

 

  

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Section 3.05                      Specific Performance.  Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief.  The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity which such Person may have.

 

Section 3.06                      Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

 

Section 3.07                      Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

Section 3.08                      Governing Law.  The Laws of the State of New York shall govern this Agreement without regard to principles of conflict of Laws.

 

Section 3.09                      Severability of Provisions.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

 

Section 3.10                      Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by PAPI set forth herein.  This Agreement and the Purchase Agreement supersede all prior agreements and understandings between the parties with respect to such subject matter.

 

Section 3.11                      Amendment.  No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and Holders holding a majority in interest of the Registrable Securities.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

Section 3.12                      No Presumption.  If any claim is made by a party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

 

 

  

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Section 3.13                      Obligations Limited to Parties to Agreement.  Each of the Parties hereto covenants, agrees and acknowledges that no Person other than CEHL and PAPI shall have any obligation hereunder and that no recourse under this Agreement or the Purchase Agreement or under any documents or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any Holder or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any Holder or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of CEHL under this Agreement or the Purchase Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation.

 

Section 3.14                      Interpretation.  Article, Section, Schedule and Exhibit references are to this Agreement, unless otherwise specified.  All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified.  The word “including” shall mean “including but not limited to”.  Whenever any determination, consent or approval is to be made or given by a Purchaser under this Agreement, such action shall be in such Purchaser’s sole discretion unless otherwise specified.

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

PACIFIC ASIA PETROLEUM, INC.

 

 

 

 

By:         /s/ Frank C. Ingriselli                                                                                                                                      

 

Frank C. Ingriselli

 

Chief Executive Officer

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

CAMAC ENERGY HOLDINGS LIMITED

 

 

 

 

By:         /s/ Kamoru Lawal                                                                                                                                         

 

Kamoru Lawal

 

Director

 

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ANNEX B

 

PACIFIC ASIA PETROLEUM, INC.

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Common Stock”), of Pacific Asia Petroleum, Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a Registration Statement for the registration and resale of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement, dated as of April __, 2010 (the “Registration Rights Agreement”), among the Company, CEHL and the other parties named therein.  A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below.  All capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

	
  

	
1.

	
Name.

 

	
  

	
(a)

	
Full Legal Name of Selling Stockholder

 

	 	  
	 	  

	
  

	
(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):

 

	 	  
	 	  

 

 

 

 

  

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2.  Address for Notices to Selling Stockholder:

	 	  
	 	  
	 	  
	 	
Telephone:

	 	
Fax:

	 	
Contact Person:

	
  

	
3.  Beneficial Ownership of Registrable Securities:

 

	
  

	
Type and Number of Registrable Securities beneficially owned:

 

	 	  
	 	  
	 	  
	 	  

	
  

	
4.  Broker-Dealer Status:

 

	
  

	
(a)

	
Are you a broker-dealer?

 

Yes    ̈                      No    ̈

 

	
  

	
Note:

	
If yes, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

	
  

	
(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    ̈

 

	
  

	
Note:

	
If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

	
  

	
5.  Beneficial Ownership of Other Securities of the Company Owned by the Selling Stockholder.

 

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 Stockholder:

 

	 	  
	 	  
	 	  

 

 

 

  

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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:

 

	  
	  
	  

7.  The Company has advised each Selling Stockholder that it may not use shares registered on the Registration Statement to cover short sales of Common Stock made prior to the date on which the Registration Statement is declared effective by the Commission, in accordance with 1997 Securities and Exchange Commission Manual of Publicly Available Telephone Interpretations Section A.65.  If a Selling Stockholder uses the prospectus for any sale of the Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act.  The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective shares under the Registration Statement.

 

The undersigned agrees to promptly notify the Company of any 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.

 

  

Annex B - 3

  

EXECUTION COPY

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and 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:

Pillsbury Winthrop Shaw Pittman LLP

50 Fremont Street

San Francisco, CA 94105-2228

Facsimile:  (415) 983-1200

Attention:  Scott C. Kline, Esq.

	
US 282358v.6

  

Annex B - 4

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