Exhibit 10.20
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of June 30, 2005, by and among International Thoroughbred
Breeders, Inc., a Delaware corporation (the "Company"), and the purchasers
signatory hereto (each such purchaser, a "Purchaser" and collectively, the
"Purchasers").
BACKGROUND
Pursuant to a Subscription Agreement dated as of the date hereof
among the Company and the Purchasers (the "Subscription Agreement"), the Company
is issuing 500,000 shares of the Company's Series B Convertible Preferred Stock
("Series B Preferred Stock") and warrants (the "Warrants") to purchase 600,000
shares of the Company's common stock (the "Common Stock"). The Common Stock
issuable upon exercise of the Warrants and the Common Stock issuable upon
conversion of the Series B Preferred Stock are collectively referred to herein
as the "Shares." The Series B Preferred Stock is by its terms required to be
converted into Common Stock upon the effectiveness of a Registration Statement.
In consideration of Purchasers' entering into the Subscription
Agreement and their purchases of Series B Preferred Stock, the Company has
agreed to grant certain registration rights to the Purchasers as more fully set
forth herein, under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Shares.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Subscription Agreement shall have the meanings
given such terms in the Subscription Agreement. As used in this Agreement, the
following terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 6(d).
"Closing Date" means the date hereof.
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Effectiveness Period" shall have the meaning set forth in Section
2.
"Filing Date" means, with respect to the Registration Statement
required to be filed hereunder, the 45th calendar day following the
Company's filing of its Annual Report on Form 10-K with the Commission
for its fiscal year ending June 30, 2005.
"Holder" or "Holders" means the holder or holders, as the case may
be, from time to time of Registrable Securities.
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"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).
"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 or
deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means all of the Shares and any
additional shares purchased under Section 2(b) hereof.
"Registration Statement" means the registration statements
required to be filed hereunder, including (in each case) the Prospectus,
amendments and supplements to the registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by
reference in the registration statement.
"Rule 114(k)" means Rule 114(k) 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 purpose and 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 purpose and 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 purpose and effect as such Rule.
2. Registration.
(a) On or prior to the Filing Date, the Company shall prepare and file
with the Commission a Registration Statement, or include in an amendment to a
previously filed Registration Statement, covering the resale of all of the
Registrable Securities for an offering
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to be made on a continuous basis pursuant to Rule 415. The Registration
Statement required hereunder shall be on Form S-3 (except if the Company or the
transaction is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case the Registration shall be on another
appropriate form in accordance herewith). The Registration Statement required
hereunder shall contain (except if otherwise directed by the Holders)
substantially the "Plan of Distribution" attached hereto as Annex A. Subject to
the terms of this Agreement, the Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act as soon
as reasonably possible after the filing thereof, and shall use its best efforts
to keep the Registration Statement continuously effective under the Securities
Act until the date when all Registrable Securities covered by the Registration
Statement have been sold or may be sold by persons who are not affiliates of the
Company without volume restrictions pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed to the Company's transfer agent and the affected Holders (the
"Effectiveness Period").
(b) If a Registration Statement is not filed with the Commission on or
prior to December 31, 2005, the Company shall grant additional warrants to
purchase Common Stock to Holders, having a warrant exercise price of $.01 per
share and otherwise on the same terms as the Warrants, pursuant to which the
aggregate number of such additional shares shall equal the product of (i) 5% of
the number of common shares that the Holders would have received upon conversion
of the Series B Preferred Stock had the Registration Statement been declared
effective by the Commission on December 31, 2005, multiplied by (ii) the number
of calendar months (including any fraction of a calendar month) after December
31, 2005 before which the Registration Statement shall have been filed. In no
event shall the number of such additional shares exceed 20% of the shares of the
Company's Common Stock issuable upon conversion of the Series B Preferred Stock
had the Registration Statement been declared effective on December 31, 2005. All
shares of Common Stock issuable under warrants granted pursuant to this Section
2(b) shall be included in the shares of Common Stock required to be registered
hereunder. Any warrants to be granted under this section 2(b) shall constitute
liquidated damages for the Company's breach of its obligation to timely register
the Shares.
3. Registration Procedures
In connection with the Company's registration obligations hereunder,
the Company shall:
(a) Within a reasonable period of time prior to the filing of the
Registration Statement or any related Prospectus or any amendment or
supplement thereto, the Company shall, furnish to the Holders copies of
all such documents proposed to be filed (including documents incorporated
or deemed incorporated by reference to the extent requested by such
Person) which documents will be subject to the review of such Holders,
and 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 shall reasonably object in
good faith, provided that the Company is notified of such objection in
writing no later than five business days after the Holders have been so
furnished copies of such documents. Each Holder agrees to furnish to the
Company a completed Questionnaire in the form attached to this Agreement
as
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Annex B (a "Selling Holder Questionnaire") not less than two business
days prior to the Filing Date or by the end of the fourth business day
following the date on which such Holder receives draft materials in
accordance with the preceding sentence. A delay by any Holder in
providing such completed Questionnaire to the Company shall extend all
time periods in this Agreement for the Company to take action which
requires the information requested by such Questionnaire.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and
the Prospectus used in connection therewith 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 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; (iii) respond
as promptly as reasonably possible to any comments received from the
Commission with respect to the Registration Statement or any amendment
thereto and, as promptly as reasonably possible, upon request, provide
the Holders true and complete copies of all correspondence from an to the
Commission relating to the Registration Statement; and (iv) 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 applicable
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 to be sold as
promptly as reasonably possible and (if requested by any such Person)
confirm such notice in writing promptly following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a "review" of the
Registration Statement and whenever the Commission comments in writing on
the Registration Statement (the Company shall upon request provide true
and complete copies thereof and all written responses thereto to each of
the Holders); 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 during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) 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 (v) of the occurrence of any event or
passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement
made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
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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 light of the circumstances under which
they were made, not misleading.
(d) Use best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (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, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one conformed
copy of the Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed
to be incorporated therein by reference to the extent requested by such
Person, 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.
(f) Promptly deliver to each Holder, 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 in connection with resales by the Holder of
Registrable Securities. Subject to the terms of this Agreement, 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, except after the
giving on any notice pursuant to Section 3(c).
(g) Prior to any resale of Registrable Securities by a Holder, use
its commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or
qualification (or exemption from the Registration or qualification) of
such Registrable Securities for the resale by the Holder under the
securities or Blue Sky laws of such jurisdictions within the United
States as any Holder reasonably requests in writing, to keep the
Registration or qualification (or exemption therefrom) effective during
the Effectiveness Period and to do any and all other acts or things
reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement;
provided, that the Company shall not be required to qualify generally to
do business in any jurisdiction where it is not then so qualified,
subject the Company to any material tax in any such jurisdiction where it
is not then so subject or file a general consent to service of process in
any such jurisdiction.
(h) If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statement, which certificates shall be free,
to the extent permitted by the Subscription Agreement, of all restrictive
legends,
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and to enable such Registrable Securities to be in such denominations and
registered in such names as any such Holders may request.
(i) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as reasonably 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, neitheIr
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 light
of the circumstances under which they were made, not misleading. If the
Company notifies the Holders in accordance with clauses (ii) through (v)
of Section 3(c) above to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable. The Company shall be entitled to exercise its
right under this Section 3(i) to suspend the availability of a
Registration Statement and Prospectus for a period not to exceed 60 days
(which need not be consecutive days) in any 12 month period.
(j) Comply with all applicable rules and regulations of the
Commission.
(k) The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and the person thereof that has voting
and dispositive control over the Securities. During any periods that the
Company is unable to meet its obligations hereunder with respect to the
registration of the Registrable Securities solely because any Holder
fails to furnish such information within three business days of the
Company's request, all obligations of the Company hereunder, the
performance of which depends upon its receipt of such information, shall
be suspended, and all related time periods shall be tolled, until such
information is delivered to the Company.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company 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 any trading market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably 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, (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. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation
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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 and the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder. In no event shall the Company
be responsible for any broker or similar commissions or any legal fees or other
costs of the Holders.
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, agents 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, reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any
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 light of the circumstances under which they
were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by
such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment
or supplement thereto (it being understood that the Holder has reviewed
and approved Annex A hereto for this purpose) or (ii) in the case of an
occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the
Advice contemplated in Section 6(c). 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 or employees of
such controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, to the extent arising out
of or based solely upon: (x) such Holder's failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue
or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in
any
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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 not misleading (i) 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 to the Company
specifically for inclusion in the Registration Statement or such
Prospectus or (ii) to the extent that (1) such untrue statement or
omission is based solely upon information regarding such Holder furnished
in writing to the Company by such Holder expressly for use therein, or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for
use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood
that the Holder has reviewed and approved Annex A hereto for this
purpose) or (2) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6(c). In no
event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(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 shall promptly
notify the Person from whom indemnity is sought (the "Indemnifying
Party") in writing, and the Indemnifying Party shall have the right 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 such failure
shall have 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; (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 a material 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 the reasonable
fees and expenses of one separate 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,
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which shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are
the subject matter of such Proceeding.
Subject to the terms of this Agreement, all reasonable 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),
other than legal fees incurred by the Indemnified Party after the
Indemnifying Party has assumed defense of such Proceeding, shall be paid
to the Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party; provided, that the Indemnified
Party shall promptly reimburse the Indemnifying Party for that portion of
such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder,
determined based upon the relative faults of the parties.
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (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 fault 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 this Agreement, 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.
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. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount
in excess of the amount by which the proceeds actually received by such
Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, except in the case of fraud by
such Holder.
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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.
6. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a
Holder of any of their obligations under this Agreement, each 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) Compliance. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
(c) Discontinued Disposition. 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), 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 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. The Company
will use its best efforts to ensure that the use of the Prospectus may be
resumed as promptly as it practicable.
(d) 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 each Holder of the then outstanding
Registrable Securities.
(e) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be made
in accordance with the provisions of the Subscription Agreement.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder. Each
Holder may assign their respective rights hereunder in the manner and to
such Persons as it shall be permitted to transfer Series B Preferred
Stock under the Subscription Agreement.
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(g) Execution and 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. 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.
(h) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
determined with the provisions of the Subscription Agreement.
(i) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(j) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, 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 commercially
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.
(k) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(l) Independent Nature of Holders' Obligations and Rights. The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be
responsible in any way for the performance of the obligations of any
other Holder hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by
any Holder pursuant hereto or thereto, shall be deemed to constitute the
Holders as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect
and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder
to be joined as an additional party in any proceeding for such purpose.
*************************
11
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
By:_____________________________
Name:
Title:
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[PURCHASER'S SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Name of Investing Entity: __________________________
Signature of Authorized Signatory of Investing entity:_________________________
Name of Authorized Signatory:_______________________
Title of Authorized Signatory:______________________
[SIGNATURE PAGES CONTINUE]
13
ANNEX A
Plan of Distribution
The common shares which may be sold by the selling shareholders and any of
their pledgees, donees, transferees or other successors-in-interest, may be
disposed of from time to time in one or more transactions, which may involve:
o ordinary brokerage transactions and transactions in which
the broker solicits purchasers;
o sales on the NASDAQ Small Cap Market or any other principal
market on which the common shares trade at the time of
sale, including directly with a market maker acting as
principal;
o privately-negotiated transactions, which include direct
sales to purchasers and sales effected through agents;
o a block trade in which the broker or dealer will attempt to
sell the common shares as agent but may position and resell
a portion of the block as principal to facilitate the
transaction;
o purchases by a broker or dealer as principal and resale by
that broker or dealer for its own account;
o an exchange distribution in accordance with the rules of
that exchange or transactions in the over-the-counter
market;
o short sales;
o the pledge of the security for any loan or obligation,
including pledges to brokers or dealers who may, from time
to time, themselves sell or transfer the common shares or
their interest in such securities;
o the transfer of the common shares by the selling
shareholders to their partners, members or shareholders;
o a combination of any of the above; or
o any other method permitted by applicable law.
The sale price of the common shares pursuant to the prospectus may be:
o a fixed price;
o the market price prevailing at the time of sale;
o a price related to such prevailing market price;
14
o a negotiated price; or
o at any other prices as the selling shareholders may
determine, including sales below the market price.
The selling shareholders may engage broker-dealers to participate in the
sales. Such broker- dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling shareholders and/or the
purchasers of the shares for whom broker-dealers may act as agent or to whom
they may sell as principals or both (which compensation as to a particular
broker- dealer may be less than or in excess of customary commissions).
In addition, the selling shareholders may enter into hedging transactions
with broker-dealers who may engage in short sales of our common shares in the
course of hedging the positions they assume with the selling shareholders. The
selling shareholders may also enter into option or other transactions with
broker-dealers that require the delivery to such broker-dealers of our common
shares, which shares may be resold thereafter pursuant to the prospectus.
The common shares covered by the prospectus may also be sold in private
transactions pursuant to Rule 144 under the Securities Act of 1933, rather than
pursuant to the prospectus. The selling shareholders have the sole and absolute
discretion not to accept any purchase offer or make any sale of the common
shares if they deem the purchase price to be unsatisfactory at any particular
time.
In order to comply with the securities laws of certain states, if
applicable, the common shares may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
common shares may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Selling shareholders that are broker dealers are statutory underwriters
under the Securities Act of 1933. Selling shareholders that are affiliates of
broker dealers purchased the shares in the ordinary course of business and at
the time of purchase the seller had no agreements or understandings, directly or
indirectly, with any person to distribute the shares. Under certain
circumstances, the selling shareholders and any broker-dealers that act in
connection with the sales of the shares may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, and any
commissions received by them and any profit on the sale of the shares as
principals may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. Selling shareholders who are "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933 will be subject to the
prospectus delivery requirements of the Securities Act of 1933.
15
ANNEX B
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
(the "Company")
QUESTIONNAIRE TO THE SELLING SHAREHOLDERS
This Questionnaire is to be completed, signed and faxed to Xxxxx
Xxxxxx, Esquire at (000) 000-0000 by no later than __________ __, 2005, by the
person or entity indicated on the cover of this Questionnaire (the "Selling
Shareholder") whose common shares of the Company are being registered pursuant
to a Registration Statement on Form S-3. Retain a duplicate copy for your files.
If you are uncertain about any of the following questions as they
apply to your situation, please supply all relevant facts. Include separate
sheets with details if necessary. If you have any questions, please call the
Company's counsel, Xxxxx Xxxxxx, Esquire, at (000) 000-0000.
Please notify me immediately if any of the information disclosed
in your answers changes. Please answer all questions. Indicate "none" or "not
applicable" when appropriate. Information should be given as of the date of this
Questionnaire, even if previously reported to the Company.
IN ANSWERING THESE QUESTIONS, PLEASE REFER TO THE INSTRUCTIONS AT
THE BEGINNING OF THIS QUESTIONNAIRE.
Dated: __________, 2005
------------------
------------------
------------------
------------------
------------------
Name of Selling Shareholder: _________________________________
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Instructions and Definitions
The following instructions and definitions are furnished to aid
you in preparing your answers to this Questionnaire.
1. For purposes of this Questionnaire the term "Company" means
International Thoroughbred Breeders, Inc.
2. "Beneficial" ownership. The SEC has taken the position that
if you have sole or shared voting power or dispositive power
or the ability to acquire either sole or shared voting or
dispositive power of a security within 60 days, you are the
beneficial owner of that security, even though that security
is not registered in your name. Thus, for example, you could
be the beneficial owner of securities in a trust or estate
of which you are a trustee or executor, or of which you are
one of the trustees or executors, or you could be the
beneficial owner of securities which you have a right to
purchase.
3. The term "affiliate" for purposes of this Questionnaire
means any person directly or indirectly controlling,
controlled by, or under common control with the Selling
Shareholder.
4. An example response has been provided to assist you in
preparing your response.
17
1. Broker-Dealer Status.
(a) Are you, or are you an affiliate of, a broker-dealer
registered under the Securities Exchange Act of 1934?
Yes ____ No ____
If "yes," please give details below.
(b) Please confirm the following statement: The Company's equity
securities that are being purchased by you were purchased in the
ordinary course of your business, and at the time the securities were
purchased, you did not have any agreement or understanding, directly
or indirectly, with any person to distribute the securities.
Confirmed ____ Cannot Confirm ____
If "cannot confirm," please give details below.
2. Relationships with the Company.
(a) Have you held any position or office with the Company, its
predecessors or affiliates within the last three years?
Yes ____ No____
If "yes," please give details below.
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(b) Have you had any other material relationship with the
Company, its predecessors or affiliates within the last three years?
Yes ____ No____
If "yes," please give details below.
3. Equity Securities Beneficially Owned By You.
(a) Please state the number and type of equity securities of the
Company beneficially owned (please see instructions and definitions on
page 2) by you as of the date of this Questionnaire, including
securities which are exercisable or convertible into equity securities
within 60 days of the date of this Questionnaire.
Class Number of Shares
of Security Beneficially Owned
(b) If any natural person or entity other than you holds or
shares voting power or dispositive power with respect to the Company's
equity securities listed in response to Question 3(a), please provide
the names of the natural persons (including titles) or entities that
hold or share such voting power or dispositive power and indicate the
number of the Company's equity securities covered thereby.
19
(c) With respect to the Company's equity securities listed in
response to Questions 3(a) and 3(b) for which an entity holds or
shares voting power or dispositive power, please provide the names of
the natural persons (including titles) or entities that control the
entity or entities listed in response to Questions 3(a) and 3(b).
(d) Please continue to list the natural persons or entities that
control the entities listed in response to Question 3(c) and the
entities listed in response to this Question 3(d) until you have
listed only natural persons (including titles) that control the
applicable entity or entities.
(e) If any person or entity disclaims beneficial ownership of any
of the equity securities you have listed in response to Question 3,
please so indicate:
20
EXAMPLE RESPONSE
The following is an example of a response to items 1 through 3. Please assume
ABC Corporation is the Selling Shareholder for purposes of this example.
1. Broker-Dealer Status.
ABC Corporation is an affiliate of a broker-dealer because its sole
shareholder, DEF Corporation, is a broker-dealer.
2. Relationships with the Company.
(a) ABC Corporation has not held any position or office with the Company,
its predecessors or affiliates within the last three years.
(b) ABC Corporation provided consulting services to the Company in March
2002.
3. Equity Securities Beneficially Owned By You.
Question 3(a).
Class Number of Shares
of Security Owned Beneficially
----------- --------------------
Common Shares 100,000
Warrants to purchase Common Shares 200,000
Question 3(b).
Not applicable
Question 3(c).
ABC Corporation is controlled by DEF Corporation, ABC Corporation's sole
shareholder.
Question 3(d).
DEF Corporation is controlled by XYZ Corporation, DEF Corporation's sole
shareholder. XYZ Corporation is controlled by Xxxx Xxx, XYZ Corporation's sole
shareholder and its President and Chief Executive Officer.
21
Question 3(e).
Xxxx Xxx disclaims beneficial ownership of the 100,000 Common Shares and
the Warrants to purchase 200,000 Common Shares.
22
The undersigned hereby acknowledges that the information contained herein
is true to the best of his knowledge and will notify the Company immediately of
any changes in such information.
DATED:_____________, 2005 FOR INDIVIDUALS:
__________________________________________
Name of Selling Shareholder [please print]
__________________________________________
Signature
FOR CORPORATIONS,
PARTNERSHIPS OR TRUSTS:
__________________________________________
Name of Selling Shareholder [please print]
By:_________________________________
Signature
Name:___________________________
[please print]
Title:____________________________
[please print]
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