WARRANT REPURCHASE AGREEMENT, AMENDMENT AND WAIVER

WARRANT REPURCHASE AGREEMENT, AMENDMENT AND WAIVER

This Warrant Purchase Agreement, Amendment and Waiver (the “WPA”) is made as of September 7, 2007, by and among Sino Gas International Holdings, Inc., a Utah corporation (the “Company”), Vision Opportunity Master Fund, Ltd. (“Vision”), and each of the other parties set forth on the signature page hereto (collectively, the “Investors”)(the Investors and the Company, collectively, the “Parties”).

W I T N E S S E T H:

WHEREAS, on September 7, 2006 and October 20, 2006, the Company and the Investors entered into Series B Convertible Preferred Stock Purchase Agreements (the “Stock Purchase Agreements”) pursuant to which Investors purchased from the Company units consisting of:

 

(i) 3,387,446 shares of the Company’s Series B Convertible Preferred Stock, par value $.001 per share (the “Preferred Shares”), convertible into shares of the Company’s common stock, par value $.001 per share (the “Common Stock”),

 

(ii) 3,387,446 Series A Warrants (the “Series A Warrants”) to purchase Common Stock, and

 

(iii) 1,693,723 Series B Warrants (the “Series B Warrants”) to purchase Common Stock; and

 

(iv) 3,083,588 Series J Warrants (the “Series J Warrants”) to purchase Common Stock; and

 

(v) 3,083,588 Series C Warrants (the “Series C Warrants”) to purchase Common Stock; and

 

(vi)  1,541,794 Series D Warrants (the “Series D Warrants”) to purchase Common Stock; and

 

WHEREAS, on May 15, 2007, Vision exercised 1,094,891 of the Series J Warrants, and in consideration thereof, received 1,094,891 new Series E Warrants (the “Series E Warrants”) to purchase Common Stock; and

 

WHEREAS, in connection with a new financing by the Company to be consummated on or before September 30, 2007, pursuant to which it will sell shares of its Common Stock to new investors for gross proceeds of not less than $10,000,000 (the “New Financing”), the Parties have agreed to sell certain of their warrants to the Company, amend the Stock Purchase Agreements and waive certain provisions of agreements entered into in connection with the Stock Purchase Agreements (the “Transaction Documents”). Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the applicable Transaction Documents;

 

NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, the parties hereto hereby agree as follows:

 

 

 

Section 1.1 The Parties’ Agreements.  The Parties hereby agree that simultaneous with a New Financing (the occurrence of each of the events referenced in this Section 1.1 is referenced herein as the “Closing”):

 

(a) Company Purchase of A and B Warrants.  The Company agrees to purchase from the Investors, for an aggregate purchase price of $3,500,000 (the “Purchase Price”), all of the Series A Warrants and Series B Warrants owned by Investors (the “Warrant Purchase”). The Purchase Price shall be paid to the Investors in proportion to their ownership of the Series A Warrants and Series B Warrants together, and upon payment of the Purchase Price, the Series A Warrants and Series B Warrants shall be cancelled and of no further force or effect. The Purchase Price shall be paid at the closing of the New Financing. Upon receipt of payment of the Purchase Price, Investors agree to return the Series A Warrants and Series B Warrants to the Company.

 

(b) Company Purchase of D Warrants.  The Company agrees to purchase from the Investors, simultaneous with the Warrant Purchase, for a purchase price equal to 770,897 shares of Series B Preferred Stock (or one (1) newly issued share of Series B Convertible Preferred Stock for every two (2) shares of Common Stock issuable upon the exercise of all Series D Warrants) (the “Preferred Stock Purchase Price”), all of the Series D Warrants owned by Investors. The Preferred Stock Purchase Price shall be paid to the Investors in proportion to their ownership of the Series D Warrants together upon presentation of the original Series D Warrants. The shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock issued to the Investors in connection with this Section 1.1(b) shall be registered for resale pursuant to the Vision Registration Rights Agreement (as defined below).

 

(c) Cancellation of Series J and E Warrants.  The Investors agree that simultaneous with the Warrant Purchase they shall surrender for cancellation all of their remaining 1,988,698 Series J Warrants and 1,094,891 Series E Warrants in exchange for the right to participate in the New Financing and purchase up to 3,083,589 shares of Common Stock in the New Financing (subject to Vision’s beneficial ownership not exceeding 9.9% of the Company’s issued and outstanding shares of Common Stock at the closing of the New Financing). Upon receipt of the shares of Common Stock issued to the Investors in the New Financing, Investors agree to return the Series J Warrants and Series E Warrants to the Company for cancellation. For the avoidance of doubt, the cancellation of the Series J Warrants pursuant to this Section 1.1(c) shall be deemed to be exercised in full for purposes of determining of the number of shares of Common Stock issuable upon exercise of the Series C Warrants.

 

(d) Termination of Lockup Agreement.  The Investors agree that upon the payment of the Purchase Price and the Preferred Stock Purchase Price (together, the “Conditions”), the Lockup Agreement entered into on September 7, 2006 by and among the Investors and Company management in connection with the Stock Purchase Agreements shall be terminated and of no further force or effect; provided, however, that in connection with the New Financing, Company management shall have entered into a new lock-up agreement containing terms and provisions satisfactory to the Investors.

 

 

(e)  Termination of Registration Rights Agreements; New Registration Rights Agreement.  The Investors agree that upon the Company meeting the Conditions, the Registration Rights Agreements dated September 7, 2006 and October 20, 2006 among the Investors and the Company shall be terminated and of no further force or effect, with no penalties or other payments due thereunder to Investors; provided, however, that in connection with this Agreement, the Company shall have entered into a new registration rights agreement with Vision, substantially in the form of Exhibit A attached hereto (the “Vision Registration Rights Agreement”), containing terms and provisions satisfactory to Vision. The Vision Registration Rights Agreement shall provide, among other things, that all shares of Common Stock currently held by Vision as set forth below (other than the shares of Common Stock to be issued to Vision in the New Financing which shall be included in the registration statement to be filed in connection with the New Financing), including any shares of Common Stock underlying any convertible or exerciseable securities currently held by Vision (the “Vision Shares”), shall be registered for resale following a certain period of time after the effectiveness of the registration statement to be filed in connection with the New Financing. The number of Vision Shares required to be registered pursuant to the Vision Registration Rights Agreement is as follows: (i) 136,120 shares of Common Stock acquired from the prior “shell company” holders, (ii) 321,168 shares of Common Stock issued as “make good” shares for 2006, (iii) 603,344 shares of Common Stock issuable upon conversion of the Preferred Shares issued to Vision pursuant to Section 1.1(h) hereof (which represents approximately 86.19% of the Preferred Shares issued to the Investors pursuant to Section 1.1(h) hereof), (iv) 1,094,891 shares of Common Stock previously issued upon the exercise of certain Series J Warrants, (v) 2,919,708 shares of Common Stock issuable upon the conversion of shares of Series B Convertible Preferred Stock currently held, (vi) 664,452 shares of Common Stock issuable upon conversion of the new shares of Series B Convertible Preferred Stock issued pursuant to Section 1.1(b) issued in consideration of canceling the Series D Warrant held by Vision, (vii) 271,074 shares of Common Stock issuable upon the exercise of warrants to be issued to Investors in connection with the New Financing, and (viii) 2,657,807 shares of Common Stock issuable upon the exercise of the Series C Warrant held by Vision.

 

(f) Amendment to 2007 Make Good.  The Investors agree that upon the Company meeting the Conditions, Section 3.21 of the Stock Purchase Agreements (and the applicable sections of the Securities Escrow Agreement) shall be amended to reflect that the Company’s 2007 fiscal year net income target is $7,900,000 (not taking into account proceeds raised in the New Financing). In addition, in connection with the New Financing, the new securities purchase agreement to be entered into by the investors and the Company shall contain a make good provision containing terms and provisions satisfactory to the Investors, including, but not limited to, a 2008 fiscal year net income target of $11,000,000.

 

(g) Amendment and Waiver of Series C Warrants.  The Company and the Investors agree that upon the Company meeting the Conditions the Series C Warrant shall be amended as follows: (i) the Warrant Price of the Series C Warrants shall be equal to 150% of the per share purchase price for the Common Stock in the New Financing; (ii) Section 4(d) shall be waived and removed with respect to the New Financing and any future transaction and shall be deleted in its entirety, and (iii) the following provision shall be added as Section 2(j):

 

(j) The Issuer shall have the right to call the exercise of all, or the remaining portion of this Warrant outstanding and unexercised in the event (i) the Per Share Market Value equals or exceeds the Warrant Price for twenty (20) consecutive Trading Days during which (i) the average daily trading volume of the Common Stock equals or exceeds 200,000 shares of Common Stock and (ii) the lowest bid price of the Common Stock exceeds 200% of the Warrant Price, (ii) all Warrant Stock is registered for resale by the Holder under an effective registration statement from the date that is 30 days prior to the issuance of the Call Notice (as defined below) through the expiration of the Call Period (as defined below); (iii) the Issuer’s Common Stock is listed for trading on the New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market; (iv) trading in the Common Stock shall not have been suspended by the Securities and Exchange Commission; (v) the Issuer is in material compliance with the terms and conditions of this Warrant, the Registration Rights Agreement and the other Transaction Documents; and (vi) the Holder is not in possession of any material nonpublic information (the “Call Conditions”). Within ten (10) business days of the Call Conditions being satisfied, the Company shall deliver a written notice to each registered Holder (the “Call Notice”). Each Holder shall have thirty (30) calendar days from the receipt of the Call Notice to exercise the remaining balance of the Warrant (the “Call Period”). Upon the expiration of the Call Period, any unexercised Warrant shall automatically expire. Notwithstanding anything in the foregoing to the contrary, if the Holder may not exercise this Warrant as a result of the restriction contained in Section 7 hereof the Call Notice shall be deemed automatically amended to apply only to such portion of this Warrant as may be exercised by the Holder in accordance with such Section 7 as then in effect.

Upon the written request of any of the Investors, the Company shall promptly issue to such Investor a new Series C Warrant reflecting the amended terms set forth in this Section 1.1(g).

 

(h) Amendment to Stock Purchase Agreements, Definition of “Permitted Financing”, and Warrants.  The Investors agree that upon the Company meeting the Conditions, the Stock Purchase Agreements shall be amended to delete Section 3.22 in its entirety; provided, however, that the Investors shall receive, upon the Closing, an aggregate of 700,000 shares of Preferred Shares, or shares of preferred stock with the same designations, preferences and rights as the Preferred Shares, in proportion to their purchase of Preferred Shares pursuant to the Stock Purchase Agreements. The Investors shall also receive, upon the Closing, warrants to purchase 271,074 shares of Common Stock, having a strike price equal to 110% of the Company’s Common Stock on the Closing Date and having a term of three years. The Investors further agree that upon the Company meeting the Conditions, the definition of “Permitted Financing” contained in Section 3.23(b) of the Stock Purchase Agreements shall be amended to include the New Financing.

 

 

 

 

Section 2.1 Fees and Expenses. Each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this WPA; provided that the Company shall pay the reasonable, out-of-pocket fees and expenses, including all actual attorneys’ fees and expenses (including disbursements and out-of-pocket expenses), incurred by Vision in connection with the negotiation, execution and delivery of this WPA and the transactions contemplated hereunder, which payment shall be made at the closing of the New Financing.

 

Section 2.2 Specific Enforcement, Consent to Jurisdiction.

 

(a) Each of the Company and the Investors (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this WPA or the transactions contemplated hereby and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Investors consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this WPA and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 3.2 shall affect or limit any right to serve process in any other manner permitted by law.

 

Section 2.3 Entire Agreement; Amendment. This WPA contains the entire understanding and agreement of the Parties with respect to the matters covered hereby, except as specifically set forth herein, neither the Company nor any of the Investors makes any representations, warranty, covenant or undertaking with respect to such matters and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. No provision of this WPA may be waived or amended other than by a written instrument signed by the Company and the Investors, and no provision hereof may be waived other than by an a written instrument signed by the party against whom enforcement of any such amendment or waiver is sought.

 

Section 2.4 Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telex (with correct answer back received), telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Company:

Sino Gas International Holdings, Inc. N0.18 Zhong Guan Cun Dong St. Haidian District Beijing, China Attention: Chen Fang Tel. No.: 011-86-10-82600527 Fax No.: 011-010-82600042

 

 

	with copies to:	GUZOV OFSINK, LLC 600 Madison Avenue, 14th Floor New York, New York 10022 Attention: Darren Ofsink Tel. No.: (212) 371-8008, ext. 127 Fax No.: (212) 688-7273
	If to any Investor:	At the address of such Investor set forth on Exhibit A to this WPA, with copies to Investor’s counsel as set forth on Exhibit A or as specified in writing by such Investor with copies to:
		Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 Attention: Christopher S. Auguste Tel No.: (212) 715-9100 Fax No.: (212) 715-8000   Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto

 

Section 2.5 Waivers. No waiver by any Party of any default with respect to any provision, condition or requirement of this WPA shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

 

Section 2.6 Headings. The article, section and subsection headings in this WPA are for convenience only and shall not constitute a part of this WPA for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

 

Section 2.7  Successors and Assigns. This WPA shall be binding upon and inure to the benefit of the parties and their successors and assigns.  

 

Section 2.8 No Third Party Beneficiaries. This WPA 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.

 

 

Section 2.9 Governing Law. This WPA shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This WPA shall not be interpreted or construed with any presumption against the party causing this WPA to be drafted.

 

Section 2.10 Counterparts. This WPA may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same WPA and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

 

Section 2.11 Severability. The provisions of this WPA are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this WPA or the Transaction Documents shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this WPA and such provision shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

 

Section 2.12 Further Assurances. From and after the date of this WPA, upon the request of any Investor or the Company, each of the Company and the Investors shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this WPA and each of the other Transaction Documents.

 

Section 2.13 Delivery of Securities. Within five (5) business days of the Closing, the Company shall deliver to the Investors all securities and other deliverables as contemplated by this WPA, including, without limitation, the newly issued shares of Series B Convertible Preferred Stock and/or other shares of preferred stock with the same rights and designations as the shares of Series B Convertible Preferred Stock, the newly issued warrants as contemplated by Section 1.1(h) and the new Series C Warrants (if requested in writing by the Investors).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this WPA to be duly executed by their respective authorized officer as of the date first above written.

SEI PRIVATE TRUST CO. FAO - THE JM SMUCKER CO. MASTER TRUST
By:	/s/ Authorized Officer
Name:
Title:
CORONADO CAPITAL PARTNERS LP
By:	/s/ Authorized Officer
Name:
Title:
NITE CAPITAL LP
By:	/s/ Authorized Officer
Name:
Title:
/s/ Ijak Malik
Ijak Malik

 

 

This Registration Rights Agreement (this "Agreement") is made and entered into as of September __, 2007, by and among Sino Gas International Holdings, Inc., a Utah corporation (the "Company"), and the purchasers listed on Schedule I hereto (the "Purchasers").

WHEREAS, on September 7, 2006 and October 20, 2006, the Company and the Purchasers entered into Series B Convertible Preferred Stock Purchase Agreements (the “Stock Purchase Agreements”) pursuant to which the Purchasers purchased from the Company shares of its Series B Convertible Preferred Stock and Warrants to purchase shares of Common Stock, and in connection therewith, the parties entered into Registration Rights Agreements with respect to the rights of the Purchasers to have certain of the Company’s securities issued pursuant to the Stock Purchase Agreements registered for resale;

WHEREAS, in connection with a new financing by the Company to be consummated on or before September 30, 2007, pursuant to which it will sell shares of its Common Stock to new investors for gross proceeds of not less than $10,000,000 (the “New Financing”), the Purchasers and the Company deem it desirable to enter into this Agreement to memorialize the registration rights of the Purchasers and the investors in the New Financing;

This Agreement is being entered into pursuant to the Warrant Repurchase Agreement, Amendment and Waiver dated as of the date hereof among the Company and the Purchasers (the "Amendment Agreement").

The Company and the Purchasers hereby agree as follows:

1. Definitions.

Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Amendment Agreement. As used in this Agreement, the following terms shall have the following meanings:

"Advice" shall have meaning set forth in Section 3(m).

"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing.

"Board" shall have meaning set forth in Section 3(n).

 

"Business Day" means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the state of New York generally are authorized or required by law or other government actions to close.

"Closing Date" means the date of the Closing pursuant to the Amendment Agreement.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means the Company's Common Stock, par value $.001 per share.

“Conversion Shares” means the shares of the Common Stock issuable upon conversion of the Preferred Stock.

"Effectiveness Date" means, subject to Section 2(b) hereof, with respect to the Registration Statement, the earlier of (A) the ninetieth (90^th) day following the Filing Date (or in the event the Registration Statement receives a “full review” by the Commission, the one hundred twentieth (120^th) day following the Filing Date) or (B) the date which is within three (3) Business Days after the date on which the Commission informs the Company that (i) the Commission will not review the Registration Statement or (ii) the Company may request the acceleration of the effectiveness of the Registration Statement and the Company makes such request; provided that, if the Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a legal holiday or a day on which the Commission is authorized or required by law or other government actions to close, the Effectiveness Date shall be the following Business Day.

"Effectiveness Period" shall have the meaning set forth in Section 2.

"Event" shall have the meaning set forth in Section 7(e).

"Event Date" shall have the meaning set forth in Section 7(e).

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Filing Date" means, subject to Section 2(b), with respect to the Registration Statement, the later of (i) sixty (60) days following the sale of substantially all of the registrable securities included in the last registration statement filed in connection with the New Financing and (ii) six (6) months following the effective date of the last registration statement filed in connection with the New Financing, or such earlier or later date as permitted or required by the Commission; provided that, if the Filing Date falls on a Saturday, Sunday or any other day which shall be a legal holiday or a day on which the Commission is authorized or required by law or other government actions to close, the Filing Date shall be the following Business Day.

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

"Indemnified Party" shall have the meaning set forth in Section 5(c).

"Indemnifying Party" shall have the meaning set forth in Section 5(c).

 

"Losses" shall have the meaning set forth in Section 5(a).

“New Financing” shall have the meaning ascribed to such term in the recitals to this Agreement.

“New Warrants” means warrants exercisable for 271,074 shares of Common Stock to be issued by the Company to the Purchasers at the Closing.

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

"Preferred Stock" means the shares of the Company’s Series B Convertible Preferred Stock issued to the Purchasers pursuant to Stock Purchase Agreements and the Amendment Agreement.

"Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

"Prospectus" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus.

 

"Registrable Securities" means (i) the shares of Common Stock issuable upon conversion of the Preferred Stock (including, without limitation, 2,919,708 shares issuable upon the conversion of shares of Preferred Stock held by Vision Opportunity Master Fund, Ltd. (“Vision”) and 770,897 shares of Common Stock issuable upon conversion of the new shares of Preferred Stock issued to Vision pursuant to Section 1.1(b) of the Amendment Agreement), (ii) the shares of Common Stock issuable upon exercise of the Warrants (including, without limitation, 2,657,807 shares of Common stock issuable upon the exercise of the Series C Warrant held by Vision), (iii) 136,120 shares of Common Stock acquired by Vision from the Company’s prior “shell company” holders, (iv) 321,168 shares of Common Stock issued to Vision as “make good” shares for 2006 under the Stock Purchase Agreements, (v) 1,094,891 shares of Common Stock issued upon the exercise of certain warrants held by Vision, and (vi) 271,074 shares of Common Stock issuable upon exercise of the New Warrants.

"Registration Statement" means the registration statements and any additional registration statements contemplated by Section 2, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference in such registration statement.

"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.

  "Rule 424" means Rule 424 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.

"Special Counsel" means Kramer Levin Naftalis & Frankel LLP, for which the Holders will be reimbursed by the Company pursuant to Section 4.

“Transaction Documents” means this Agreement, the Stock Purchase Agreements (and any agreements entered into in connection with the execution of the Stock Purchase Agreements which have not been terminated pursuant to the Amendment Agreement) and the Amendment Agreement.

"Warrants" means the Series C and Series D warrants held by the Purchasers which were purchased pursuant to the Stock Purchase Agreements and the New Warrants.

“Warrant Shares” means the Common Stock issuable by the Company upon exercise of the Warrants.

2. Resale Registration.

(a) On or prior to the Filing Date the Company shall prepare and file with the Commission a "resale" Registration Statement providing for the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form SB-2 (except if the Company is not then eligible to register for resale the Registrable Securities on Form SB-2, in which case such registration shall be on another appropriate form in accordance herewith and the Securities Act and the rules promulgated thereunder). Such Registration Statement shall cover to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities. The Company shall (i) not permit any securities other than the Registrable Securities and the securities to be listed on Schedule II hereto to be included in the Registration Statement and (ii) use its best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the Effectiveness Date, and to keep such Registration Statement continuously effective under the Securities Act until such date as is the earlier of (x) the date when all Registrable Securities covered by such Registration Statement have been sold or (y) the date on which the Registrable Securities may be sold without any restriction pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter, addressed to the Company's transfer agent to such effect (the "Effectiveness Period"). The Company shall request that the effective time of the Registration Statement is 4:00 p.m. Eastern Time on the effective date. If at any time and for any reason, an additional Registration Statement is required to be filed because at such time the actual number of shares of Common Stock into which the Preferred Stock is convertible and the Warrants are exercisable plus the number of shares of Common Stock exceeds the number of Registrable Securities remaining under the Registration Statement, the Company shall have twenty (20) Business Days to file such additional Registration Statement, and the Company shall use its best efforts to cause such additional Registration Statement to be declared effective by the Commission as soon as possible, but in no event later than sixty (60) days after filing.

 

(b) Notwithstanding anything to the contrary set forth in this Section 2, in the event the Commission does not permit the Company to register all of the Registrable Securities in the Registration Statement because of the Commission’s application of Rule 415 or the Commission requires the Company to either exclude shares held by certain Holders or deem such Holders to be underwriters with respect to their Registrable Securities, the Company shall register in the Registration Statement such number of Registrable Securities as is permitted by the Commission without naming such Holder as an underwriter (unless such Holder agrees to be named as an underwriter), provided, however, that the number of Registrable Securities to be included in such Registration Statement or any subsequent registration statement shall be determined in the following order: (i) first, 136,120 shares of Common Stock acquired by Vision from the Company’s prior “shell company” holders, (ii) second, 321,168 shares of Common Stock issued to Vision as “make good shares” for 2006 under the Stock Purchase Agreements, (iii) third, 1,094,891 shares of Common Stock issued upon the exercise of certain warrants held by Vision, (iv) fourth, the shares of Common Stock issuable upon conversion of the Preferred Stock (including, without limitation, 2,919,708 shares issuable upon the conversion of shares of Preferred Stock held by Vision and 770,897 shares of Common Stock issuable upon conversion of the new shares of Preferred Stock issued to Vision pursuant to Section 1.1(b) of the Amendment Agreement) shall be registered on a pro rata basis among the holders of the Preferred Stock, (v) fifth, the shares of Common Stock issuable upon exercise of the New Warrants, and (vi) sixth, the shares of Common Stock issuable upon exercise of any other outstanding Warrants (including, without limitation, 2,657,807 shares of Common stock issuable upon the exercise of the Series C Warrant held by Vision) shall be registered on a pro rata basis among the holders of the Warrants. In the event the Commission does not permit the Company to register all of the Registrable Securities in the initial Registration Statement, the Company shall use its commercially reasonable efforts to file subsequent Registration Statements to register the Registrable Securities that were not registered in the initial Registration Statement as promptly as possible and in a manner permitted by the Commission. For purposes of this Section 2(b), “Filing Date” means with respect to each subsequent Registration Statement filed pursuant hereto, the later of (i) sixty (60) days following the sale of substantially all of the Registrable Securities included in the initial Registration Statement or any subsequent Registration Statement and (ii) six (6) months following the effective date of the initial Registration Statement or any subsequent Registration Statement, as applicable, or such earlier or later date as permitted or required by the Commission. For purposes of this Section 2(b), “Effectiveness Date” means with respect to each subsequent Registration Statement filed pursuant hereto, the earlier of (A) the ninetieth (90^th) day following the filing date of such Registration Statement (or in the event such Registration Statement is reviewed by the Commission, the one hundred twentieth (120^th) day following such filing date) or (B) the date which is within three (3) Business Days after the date on which the Commission informs the Company (i) that the Commission will not review such Registration Statement or (ii) that the Company may request the acceleration of the effectiveness of such Registration Statement and the Company promptly makes such request; provided that, if the Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a legal holiday or a day on which the Commission is authorized or required by law or other government actions to close, the Effectiveness Date shall be the following Business Day.

 

3. Registration Procedures.

In connection with the Company's registration obligations hereunder, the Company shall:

 

(a)  Prepare and file with the Commission on or prior to the Filing Date, a Registration Statement on Form SB-2 (or if the Company is not then eligible to register for resale the Registrable Securities on Form SB-2 such registration shall be on another appropriate form in accordance herewith and the Securities Act and the rules promulgated thereunder) in accordance with the plan of distribution as set forth on Exhibit A hereto and in accordance with applicable law, and cause the Registration Statement to become effective and remain effective as provided herein; provided, however, that not less than five (5) Business Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated therein by reference), the Company shall (i) furnish to the Holders and any Special Counsel, copies of all such documents proposed to be filed, which documents (other than those incorporated by reference) will be subject to the review of such Holders and such Special Counsel, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of Special Counsel, to conduct a reasonable review of such documents. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities or any Special Counsel shall reasonably object in writing within three (3) Business Days of their receipt thereof.

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements as necessary in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; (iii) respond as promptly as possible, but in no event later than ten (10) Business Days, to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and to provide the Holders, within such ten (10) Business Day period, true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities Act no later than 1:00 p.m. Eastern Time on the Business Day following the date the Registration Statement is declared effective by the Commission; and (v) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the Effectiveness Period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.

 

(c) Notify the Holders of Registrable Securities and any Special Counsel as promptly as possible (and, in the case of (i)(A) below, not less than three (3) Business Days prior to such filing, and in the case of (iii) below, on the same day of receipt by the Company of such notice from the Commission) and (if requested by any such Person) confirm such notice in writing no later than one (1) Business Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is filed; (B) when the Commission notifies the Company whether there will be a "review" of such Registration Statement and whenever the Commission comments in writing on such Registration Statement and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation or threatening of any Proceedings for that purpose; (iv) if at any time any of the representations and warranties of the Company contained in any agreement contemplated hereby ceases to be true and correct in all material respects; (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (vi) of the occurrence of any event that makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any 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.

(d) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of, as promptly as possible, (i) any order suspending the effectiveness of the Registration Statement or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction.

(e) If requested by the Holders of a majority in interest of the Registrable Securities, (i) promptly incorporate in a Prospectus supplement or post-effective amendment to the Registration Statement such information as the Company reasonably agrees should be included therein and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment.

(f) If requested by any Holder, furnish to such Holder and any Special Counsel, without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission.

 

(g) Promptly deliver to each Holder and any Special Counsel, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request; and subject to the provisions of Sections 3(m) and 3(n), the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.

(h) Prior to any public offering of Registrable Securities, use its best efforts to register or qualify or cooperate with the selling Holders and any Special Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any material tax in any such jurisdiction where it is not then so subject.

(i) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to a Registration Statement, which certificates, to the extent permitted by the Transaction Documents and applicable federal and state securities laws, shall be free of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any Holder may request in connection with any sale of Registrable Securities.

(j) Upon the occurrence of any event contemplated by Section 3(c)(vi), as promptly as possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will 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, in the light of the circumstances under which they were made, not misleading.

(k) Use its best efforts to cause all Registrable Securities relating to the Registration Statement to be listed on the OTC Bulletin Board or any other securities exchange, quotation system or market, if any, on which similar securities issued by the Company are then listed or traded as and when required pursuant to the Transaction Documents.

(l) Comply in all material respects with all applicable rules and regulations of the Commission and make generally available to its security holders all documents filed or required to be filed with the Commission, including, but not limited, to, earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 not later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) commencing on the first day of the first fiscal quarter of the Company after the effective date of the Registration Statement, which statement shall conform to the requirements of Rule 158.

 

(m) The Company may require each selling Holder to furnish to the Company information regarding such Holder and the distribution of such Registrable Securities as is required by law to be disclosed in the Registration Statement, Prospectus, or any amendment or supplement thereto, and the Company may exclude from such registration the Registrable Securities of any such Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.

If the Registration Statement refers to any Holder by name or otherwise as the holder of any securities of the Company, then such Holder shall have the right to require (if such reference to such Holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force) the deletion of the reference to such Holder in any amendment or supplement to the Registration Statement filed or prepared subsequent to the time that such reference ceases to be required.

Each Holder covenants and agrees that it will not sell any Registrable Securities under the Registration Statement until the Company has electronically filed the Prospectus as then amended or supplemented as contemplated in Section 3(g) and notice from the Company that the Registration Statement and any post-effective amendments thereto have become effective as contemplated by Section 3(c).

Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 3(j), or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement.

(n) At any time following the date that the Registration Statement is declared effective by the Commission, if (i) there is material non-public information regarding the Company which the Company's Board of Directors (the "Board") determines not to be in the Company's best interest to disclose and which the Company is not otherwise required to disclose, (ii) there is a significant business opportunity (including, but not limited to, the acquisition or disposition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or other similar transaction) available to the Company which the Board determines not to be in the Company's best interest to disclose, or (iii) the Company is required to file a post-effective amendment to the Registration Statement to incorporate the Company’s quarterly and annual reports and audited financial statements on Forms 10-QSB and 10-KSB, then the Company may postpone or suspend effectiveness of a registration statement for a period not to exceed twenty (20) consecutive days; provided that the Company may not suspend effectiveness of a registration statement under this Section 3(n) for more than forty-five (45) days in the aggregate during any three hundred sixty (360) day period; provided, however, that no such suspension shall be permitted for consecutive twenty (20) day periods arising out of the same set of facts, circumstances or transactions.

 

4. Registration Expenses.

All fees and expenses incident to the performance of or compliance with this Agreement by the Company, except as and to the extent specified in this Section 4, shall be borne by the Company whether or not the Registration Statement is filed or becomes effective and whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the OTC Bulletin Board and each other securities exchange or market on which Registrable Securities are required hereunder to be listed, if any, (B) with respect to filing fees required to be paid to the National Association of Securities Dealers, Inc. and the NASD Regulation, Inc. and (C) in compliance with state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel for the Holders in connection with Blue Sky qualifications of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as the Holders of a majority of Registrable Securities may designate)), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company and Special Counsel for the Holders, in the case of the Special Counsel, up to a maximum amount of $7,500, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, including, without limitation, the Company's independent public accountants (including the expenses of any comfort letters or costs associated with the delivery by independent public accountants of a comfort letter or comfort letters). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.

 

5. Indemnification.

(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, managers, partners, members, shareholders, agents, brokers, investment advisors and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or relating to any violation of securities laws or untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Holder or such other Indemnified Party furnished in writing to the Company by such Holder expressly for use therein. The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents and employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review), as incurred, arising solely out of or based solely upon any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder or other Indemnifying Party to the Company specifically for inclusion in the Registration Statement or such Prospectus. Notwithstanding anything to the contrary contained herein, each Holder shall be liable under this Section 5(b) for only that amount as does not exceed the net proceeds to such Holder as a result of the sale of Registrable Securities pursuant to such Registration Statement.

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party promptly shall notify the Person from whom indemnity is sought (the "Indemnifying Party) in writing, and the Indemnifying Party shall be entitled to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

 

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such parties shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened Proceeding in respect of which any Indemnified Party is a party and indemnity has been sought hereunder, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnified Party shall reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

 

(d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is due but unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to enforce such indemnification in accordance with its terms (by reason of public policy or otherwise), then each 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 Losses, in such proportion as is appropriate to reflect the relative benefits received by the Indemnifying Party on the one hand and the Indemnified Party on the other from the offering of the Preferred Stock and the Warrants. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault, as applicable, of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. In no event shall any selling Holder be required to contribute an amount under this Section 5(d) in excess of the net proceeds received by such Holder upon sale of such Holder’s Registrable Securities pursuant to the Registration Statement giving rise to such contribution obligation.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding 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 was not guilty of such fraudulent misrepresentation. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties pursuant to the law.

 

6. Rule 144.

As long as any Holder owns Preferred Stock, Warrants or Registrable Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder owns Preferred Stock, Warrants or Registrable Securities, if the Company is not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders and make publicly available in accordance with Rule 144(c) promulgated under the Securities Act annual and quarterly financial statements, together with a discussion and analysis of such financial statements in form and substance substantially similar to those that would otherwise be required to be included in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as any other information required thereby, in the time period that such filings would have been required to have been made under the Exchange Act. The Company further covenants that it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Person to sell Conversion Shares and Warrant Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, including providing any legal opinions relating to such sale pursuant to Rule 144. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.

 

7. Miscellaneous.

(a) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, such Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

(b) No Inconsistent Agreements. Except as contemplated by the New Financing or as disclosed in the Transaction Documents, neither the Company nor any of its subsidiaries has, as of the date hereof entered into and currently in effect, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except in connection with the New Financing or as disclosed in the Transaction Documents or on Schedule II hereto, neither the Company nor any of its subsidiaries has previously entered into any agreement currently in effect granting any registration rights with respect to any of its securities to any Person. Without limiting the generality of the foregoing, without the written consent of the Holders of a majority of the then outstanding Registrable Securities, the Company shall not grant to any Person the right to request the Company to register any securities of the Company, under the Securities Act unless the rights so granted are subject in all respects to the prior rights in full of the Holders set forth herein, and are not otherwise in conflict with the provisions of this Agreement.

(c) No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto or as disclosed on Schedule II hereto) may include securities of the Company in the Registration Statement, and the Company shall not after the date hereof enter into any agreement providing such right to any of its securityholders, unless the right so granted is subject in all respects to the prior rights in full of the Holders set forth herein, and is not otherwise in conflict with the provisions of this Agreement.

 

(d) Piggy-Back Registrations. Except in connection with the registration statement to be filed in connection with the New Financing, if at any time when there is not an effective Registration Statement providing for the resale of the Registrable Securities, the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, the Company shall send to each holder of Registrable Securities written notice of such determination and, if within thirty (30) days after receipt of such notice, or within such shorter period of time as may be specified by the Company in such written notice as may be necessary for the Company to comply with its obligations with respect to the timing of the filing of such registration statement, any such holder shall so request in writing (which request shall specify the Registrable Securities intended to be disposed of by the Purchasers), the Company will cause the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the holder, to the extent requisite to permit the disposition of the Registrable Securities so to be registered, provided that if at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to such holder and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay expenses in accordance with Section 4 hereof), and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities being registered pursuant to this Section 7(d) for the same period as the delay in registering such other securities. The Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144(k) of the Securities Act. In the case of an underwritten public offering, if the managing underwriter(s) or underwriter(s) should reasonably object to the inclusion of the Registrable Securities in such registration statement, then if the Company after consultation with the managing underwriter should reasonably determine that the inclusion of such Registrable Securities would materially adversely affect the offering contemplated in such registration statement, and based on such determination recommends inclusion in such registration statement of fewer or none of the Registrable Securities of the Holders, then (x) the number of Registrable Securities of the Holders included in such registration statement shall be reduced pro-rata among such Holders (based upon the number of Registrable Securities requested to be included in the registration), if the Company after consultation with the underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y) none of the Registrable Securities of the Holders shall be included in such registration statement, if the Company after consultation with the underwriter(s) recommends the inclusion of none of such Registrable Securities; provided, however, that if securities are being offered for the account of other persons or entities as well as the Company, such reduction shall not represent a greater fraction of the number of Registrable securities intended to be offered by the Holders than the fraction of similar reductions imposed on such other persons or entities (other than the Company).

 

(e) Failure to File Registration Statement and Other Events. The Company and the Purchasers agree that the Holders will suffer damages if the Registration Statement is not filed on or prior to the Filing Date and not declared effective by the Commission on or prior to the Effectiveness Date and maintained in the manner contemplated herein during the Effectiveness Period or if certain other events occur. The Company and the Holders further agree that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, if (A) the Registration Statement is not filed on or prior to the Filing Date, or (B) the Registration Statement is not declared effective by the Commission on or prior to the Effectiveness Date (or in the event an additional Registration Statement is filed because the actual number of shares of Common Stock into which the Warrants are exercisable exceeds the number of shares of Common Stock initially registered is not filed and declared effective with the time periods set forth in Section 2), or (C) the Company fails to file with the Commission a request for acceleration in accordance with Rule 461 promulgated under the Securities Act within three (3) Business Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that a Registration Statement will not be "reviewed," or not subject to further review, or (D) the Registration Statement is filed with and declared effective by the Commission but thereafter ceases to be effective as to all Registrable Securities at any time prior to the expiration of the Effectiveness Period, without being succeeded promptly by a subsequent Registration Statement filed with and declared effective by the Commission in accordance with Section 2 hereof, or (E) the Company has breached Section 3(n), or (F) trading in the Common Stock shall be suspended or if the Common Stock is delisted from or no longer quoted on the OTC Bulletin Board (or other principal exchange on which the Common Stock is listed or traded) for any reason for more than three (3) Business Days in the aggregate (any such failure or breach being referred to as an "Event," and for purposes of clauses (A) and (B) the date on which such Event occurs, or for purposes of clause (C) the date on which such three (3) Business Day period is exceeded, or for purposes of clause (D) after more than fifteen (15) Business Days, or for purposes of clause (F) the date on which such three (3) Business Day period is exceeded, being referred to as "Event Date"), the Company shall pay an amount in cash as liquidated damages to each Holder equal to two percent (2%) for each calendar month (prorated for shorter periods) of the Holder’s initial investment in the Preferred Stock from the Event Date until the applicable Event is cured; provided, however, that in no event shall the amount of liquidated damages payable at any time and from time to time to any Holder pursuant to this Section 7(e) exceed an aggregate of twenty percent (20%) of the amount of the Holder’s initial investment in the Preferred Stock. The Company shall not be liable for liquidated damages under this Agreement as to any Registrable Securities which are not permitted by the Commission to be included in a Registration Statement because of its application of Rule 415 until such time as the provisions of this Agreement as to the Registration Statements required to be filed pursuant to Section 2(b) are triggered, in which case the provisions of this Section 7(e) shall once again apply, if applicable. In such case, the liquidated damages shall be calculated to only apply to the percentage of Registrable Securities which are permitted by the Commission to be included in the Registration Statement. Notwithstanding anything to the contrary in this paragraph (e), if (i) any of the Events described in clauses (A), (B), (C), (D) or (F) shall have occurred, (II) on or prior to the applicable Event Date, the Company shall have exercised its rights under Section 3(n) hereof and (III) the postponement or suspension permitted pursuant to such Section 3(n) shall remain effective as of such applicable Event Date, then the applicable Event Date shall be deemed instead to occur on the second Business Day following the termination of such postponement or suspension. Liquidated damages payable by the Company pursuant to this Section 7(e) shall be payable on the first (1^st) Business Day of each thirty (30) day period following the Event Date. Notwithstanding anything to the contrary contained herein, in no event shall any liquidated damages be payable with respect to the Warrants or the Warrant Shares.

 

(f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of a majority of the Registrable Securities outstanding.

(g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., New York City time, on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice later than 5:00 p.m., New York City time, on any date and earlier than 11:59 p.m., New York City time, on such date, (iii) the Business Day following the date of mailing, if sent by overnight delivery by nationally recognized overnight courier service or (iv) actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be with respect to each Holder at its address set forth under its name on Schedule I attached hereto with copies to its legal counsel named therein, or with respect to the Company, addressed to:

	Sino Gas International Holdings, Inc.
	N0.18 Zhong Guan Cun Dong St.
	Haidian District
	Beijing, China
	Attention: Chen Fang
	Tel. No.: 011-86-10-82600527
	Fax No.: 011-010-82600042
with copies (which copies
shall not constitute notice
to the Company) to:	GUZOV OFSINK, LLC
	600 Madison Avenue, 14th Floor
	New York, New York 10022
	Attention: Darren Ofsink
	Tel. No.: (212) 371-8008, ext. 127
	Fax No.: (212) 688-7273

or to such other address or addresses or facsimile number or numbers as any such party may most recently have designated in writing to the other parties hereto by such notice. Copies of notices to each Holder (in addition to the legal counsel set forth on Schedule I hereto) shall be sent to Kramer Levin Naftalis & Frankel LLP, Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036, Attention: Christopher S. Auguste, Telephone No.: (212) 715-9100, Facsimile No.: (212) 715-8000.

 

(h) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns and shall inure to the benefit of each Holder and its successors and assigns. The Company may not assign this Agreement or any of its rights or obligations hereunder without the prior written consent of each Holder. Each Purchaser may assign its rights hereunder in the manner and to the Persons as permitted under the Transaction Documents.

(i) Assignment of Registration Rights. The rights of each Holder hereunder, including the right to have the Company register for resale Registrable Securities in accordance with the terms of this Agreement, shall be automatically assignable by each Holder to any Person of all or a portion of the Preferred Stock or Registrable Securities if: (i) the Holder 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) following such transfer or assignment the further disposition of such securities by the transferee or assignees is restricted under the Securities Act and applicable state securities laws, (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this Section, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions of this Agreement, and (v) such transfer shall have been made in accordance with the applicable requirements of the Transaction Documents. The rights to assignment shall apply to the Holders (and to subsequent) successors and assigns.

(j) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

 

(a) (k) Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted. The Company and the Holders agree that venue for any dispute arising under this Agreement will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The Company and the Holders irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The Company and the Holders consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 7(k) shall affect or limit any right to serve process in any other manner permitted by law. The Company and the Holders hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Agreement or the Transaction Documents, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. The parties hereby waive all rights to a trial by jury.

 

(l) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

(m) Severability. If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(n) Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

(o) Shares Held by the Company and its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its Affiliates (other than any Holder or transferees or successors or assigns thereof if such Holder is deemed to be an Affiliate solely by reason of its holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(p) Independent Nature of Purchasers. The Company acknowledges that the obligations of each Purchaser under the Transaction Documents are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under the Transaction Documents. The Company acknowledges that the decision of each Purchaser to purchase Securities pursuant to the Transaction Documents has been made by such Purchaser independently of any other Purchaser and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or of its Subsidiaries which may have made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no Purchaser or any of its agents or employees shall have any liability to any Purchaser (or any other person) relating to or arising from any such information, materials, statements or opinions. The Company acknowledges that nothing contained herein, or in any Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto (including, but not limited to, the (i) inclusion of a Purchaser in the Registration Statement and (ii) review by, and consent to, such Registration Statement by a Purchaser) shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. The Company acknowledges that each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that for reasons of administrative convenience only, the Transaction Documents have been prepared by counsel for  one of the Purchasers and such counsel does not represent the other Purchasers and the other Purchasers have retained their own individual counsel with respect to the transactions contemplated hereby.  The Company acknowledges that it has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed by their respective authorized persons as of the date first indicated above.

	SINO GAS INTERNATIONAL HOLDINGS, INC.
	By:
		Name:
		Title:
	VISION OPPORTUNITY MASTER FUND, LTD.
	By:
		Name:
		Title:
	SEI PRIVATE TRUST CO. FAO - THE JM SMUCKER CO. MASTER TRUST
	By:
		Name:
		Title:
	CORONADO CAPITAL PARTNERS LP
	By:
		Name:
		Title:
	NITE CAPITAL LP
	By:
	Name:
	Title:
	Ijaz Malik

 

 

Schedule I

 

List of Purchasers

 

Names and Addresses		Number of Preferred Shares
of Purchasers		& Warrants Purchased
Vision Opportunity Master Fund, Ltd.		Preferred Shares: _____________
20 W 55th St., 5th floor		Series C Warrants: ______________
New York, NY 10019
Tax ID: 27-0120759
SEI Private Trust Co. FAO		Preferred Shares: 140,000
The JM Smucker Co. Master Trust		Series C Warrants: 127,442
1 Freedom Valley Dr
Oaks, PA 19456
Attn: Suzanne Rokosny
Tax ID: 23 ###-###-####
Coronado Capital Partners LP		Preferred Shares: 180,000
c/o MS Howells		Series C Warrants: 163,854
20555 N Pima Rd, Suite 100
Scottsdale, AZ 85255
Attn: Christine Nichols
Tax ID: 20 ###-###-####
Scottsdale, AZ 85255
Attn: Christine Nichols
Tax ID: 20 ###-###-####
Nite Capital LP		Preferred Shares: _________
		Series C Warratns: ________
Izak Malik		Preferred Shares: _________
		Series C Warrants:__________

 

 

Securities Permitted to be Included on Registration Statement

None.

 

 

The selling security holders and any of their pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock being offered under this prospectus on any stock exchange, market or trading facility on which shares of our common stock are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling security holders may use any one or more of the following methods when disposing of shares:

 

·

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 resales by the broker-dealer for its account;

 

·

an exchange distribution in accordance with the rules of the applicable exchange;

 

·

privately negotiated transactions;

 

·

to cover short sales made after the date that the registration statement of which this prospectus is a part is declared effective by the Commission;

 

·

broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share;

 

·

a combination of any of these methods of sale; and

 

·

any other method permitted pursuant to applicable law.

 

The shares may also be sold under Rule 144 under the Securities Act of 1933, as amended (“Securities Act”), if available, rather than under this prospectus. The selling security holders have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if they deem the purchase price to be unsatisfactory at any particular time.

 

The selling security holders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling security holder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares.

 

Broker-dealers engaged by the selling security holders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling security holders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted by applicable law.

 

 

If sales of shares offered under this prospectus are made to broker-dealers as principals, we would be required to file a post-effective amendment to the registration statement of which this prospectus is a part. In the post-effective amendment, we would be required to disclose the names of any participating broker-dealers and the compensation arrangements relating to such sales.

 

The selling security holders and any broker-dealers or agents that are involved in selling the shares offered under this prospectus may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales. Commissions received by these broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Any broker-dealers or agents that are deemed to be underwriters may not sell shares offered under this prospectus unless and until we set forth the names of the underwriters and the material details of their underwriting arrangements in a supplement to this prospectus or, if required, in a replacement prospectus included in a post-effective amendment to the registration statement of which this prospectus is a part.

 

The selling security holders and any other persons participating in the sale or distribution of the shares offered under this prospectus will be subject to applicable provisions of the Exchange Act, and the rules and regulations under that act, including Regulation M. These provisions may restrict activities of, and limit the timing of purchases and sales of any of the shares by, the selling security holders or any other person. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and other activities with respect to those securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares.

 

If any of the shares of common stock offered for sale pursuant to this prospectus are transferred other than pursuant to a sale under this prospectus, then subsequent holders could not use this prospectus until a post-effective amendment or prospectus supplement is filed, naming such holders. We offer no assurance as to whether any of the selling security holders will sell all or any portion of the shares offered under this prospectus.

 

We have agreed to pay all fees and expenses we incur incident to the registration of the shares being offered under this prospectus. However, each selling security holder and purchaser is responsible for paying any discounts, commissions and similar selling expenses they incur.

 

We and the selling security holders have agreed to indemnify one another against certain losses, damages and liabilities arising in connection with this prospectus, including liabilities under the Securities Act.