REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this "Agreement")
is made
and entered into as of October 26, 2007, by and among Fushi International,
Inc.,
a Nevada corporation (the "Company"),
and
the investors signatory hereto, including the holders of the Notes (as defined
below) (each an "Investor"
and
collectively, the "Investors").
This
Agreement is made in connection with the Securities Purchase Agreement, dated
as
of the date hereof among the Company and the Investors (the "Purchase
Agreement")
and the
Waiver and Consent dated as of the date hereof between the Company, among
others, and Citadel Equity Fund, Ltd. (“Citadel”).
The
Company and the Investors hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement will have the respective meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms have the
respective meanings set forth in this Section 1:
“Advice”
has
the
meaning set forth in Section 7(d).
"Commission" means
the Securities and Exchange Commission.
"Commission
Comments" means
written comments pertaining
solely to Rule 415 which
are received by the Company from the Commission to a filed Registration
Statement, a copy of which shall have been provided by the Company to the
Holders, which either (i) requires the Company to limit the number of
Registrable Securities which may be included therein to a number which is less
than the number sought to be included thereon as filed with the Commission
or
(ii) requires the Company to either exclude Registrable Securities held by
specified Holders or deem such Holders to be underwriters with respect to
Registrable Securities they seek to include in such Registration
Statement.
“Common
Stock”
means
the common stock, par value per share of $0.006, of the Company.
“Cut
Back Shares”
has
the
meaning set forth in Section 2(b).
"Effective
Date"
means,
as to a Registration Statement, the date on which such Registration Statement
is
first declared effective by the Commission.
“Effectiveness
Date”
means
(a) with respect to the initial Registration Statement required to be filed
pursuant to Section 2(a), the earlier of: (i) the 90th
calendar
day following the Closing Date; provided,
that,
if the Commission reviews and has written comments to the filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (a)(i) shall
be the 120th
day
following the Closing Date, and (ii) the fifth Trading Day following the date
on
which the Company is notified by the Commission that the initial Registration
Statement will not be reviewed or is no longer subject to further review and
comments; (b) with respect to any additional Registration Statements required
to
be filed pursuant to Section 2(a), the earlier of: (i) the 90th
calendar
day following the applicable Filing Date for such additional Registration
Statement(s) and (ii) the fifth Trading Day following the date on which the
Company is notified by the Commission that the such additional Registration
Statement(s) will not be reviewed or is no longer subject to further review;
and
(c) with respect to any additional Registration Statements required to be filed
solely due to SEC Restrictions, the earlier of: (i) the 90th
calendar
day following the applicable Restriction Termination Date and (ii) the fifth
Trading Day following the date on which the Company is notified by the
Commission that such Registration Statement will not be reviewed or is no longer
subject to further review and comments.
"Effectiveness
Period"
means,
as to any Registration Statement required to be filed pursuant to this
Agreement, the period commencing on the Effective Date of such Registration
Statement and ending on the earliest to occur of (a) the second anniversary
of
such Effective Date, (b) such time as all of the Registrable Securities covered
by such Registration Statement have been publicly sold by the Holders of the
Registrable Securities included therein, or (c) such time as all of the
Registrable Securities covered by such Registration Statement may be sold by
the
Holders without volume restrictions pursuant to Rule 144, in each case as
determined by the counsel to the Company pursuant to a written opinion letter
to
such effect, addressed and acceptable to the Company's transfer agent and the
affected Holders.
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended.
"Filing
Date"
means
(a) with respect to the initial Registration Statement required to be filed
pursuant to Section 2(a), the 15th
calendar
day following the Closing Date; (b) with respect to any additional Registration
Statements required to be filed pursuant to the last sentence of Section 2(a),
the 15th
calendar
day following the Effective Date for the last Registration Statement filed
pursuant to this Agreement under Section 2(a); and (c) with respect to any
additional Registration Statements required to be filed due to SEC Restrictions,
the 15th
calendar
day following the applicable Restriction Termination Date;
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 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”
has the
meaning set forth in Section 6(c).
“Indemnifying
Party”
has the
meaning set forth in Section 6(c).
“Losses”
has the
meaning set forth in Section 6(a).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
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"Notes"
means
the Company’s 3% Senior Secured Convertible Notes due 2012, the terms of which
are governed by the Indenture dated January 25, 2007 between the Company and
The
Bank of New York, as trustee (the “Indenture”).
"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 a 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 a 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:
(i) the Shares, (ii) any shares of Common Stock issuable upon exercise of
warrants issued to any placement agent as compensation in connection with the
financing that is the subject of the Purchase Agreement ("Placement
Agent Warrant Shares"),
(iii)
any securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event, or any exercise price
adjustment with respect to any of the securities referenced in (i) or (ii)
above, and (iv) any shares (the “Conversion
Shares”)
of
Common Stock issued or issuable upon conversion of the Notes pursuant to the
terms of the Indenture; provided,
however, that following such time as any of the securities described in clauses
(i), (ii), (iii) or (iv) above have been sold by a Holder pursuant to a
Registration Statement or Rule 144, then such securities shall cease to be
considered “Registrable Securities” for purposes of this Agreement.
"Registration
Statement"
means
the initial registration statement required to be filed in accordance with
Section 2(a) and any additional registration statements required to be filed
under this Agreement, including in each case the Prospectus, amendments and
supplements to such registration statements or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference therein.
“Restriction
Termination Date”
has
the
meaning set forth in Section 2(b).
"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
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.
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"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.
“SEC
Restrictions”
has
the
meaning set forth in Section 2(b).
"Securities
Act"
means
the Securities Act of 1933, as amended.
"Shares"
means
the shares of Common Stock issued or issuable to the Investors pursuant to
the
Purchase Agreement.
2. Registration.
(a) On
or
prior to the applicable Filing Date, the Company shall prepare and file with
the
Commission a Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule
415.
Each Registration Statement required to be filed under this Agreement shall
be
filed on Form S-3 (or on such other form appropriate for such purpose) and
contain (except if otherwise required pursuant to written comments received
from
the Commission upon a review of such Registration Statement, other than as
to
the characterization of any Holder as an underwriter, which shall not occur
without such Holder’s written consent) the "Plan of Distribution" attached
hereto as Annex
A.
The
Company shall use its reasonable best efforts to cause each Registration
Statement required to be filed under this Agreement to be declared effective
under the Securities Act as
soon as
possible but, in any event, no later than its Effectiveness Date, and shall
use
its reasonable best efforts to keep each such Registration Statement
continuously effective during its entire Effectiveness Period. By 5:00 p.m.
(New
York City time) on the Business Day immediately following the Effective Date
of
each Registration Statement, the Company shall file with the Commission in
accordance with Rule 424 under the Securities Act the final prospectus to be
used in connection with sales pursuant to such Registration Statement (whether
or not such filing is technically required under such Rule). If for any reason
other than due solely to SEC Restrictions, a Registration Statement is effective
but not all outstanding Registrable Securities are registered for resale
pursuant thereto, then the Company shall prepare and file by the applicable
Filing Date an additional Registration Statement to register the resale of
all
such unregistered Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415.
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(b) Notwithstanding
anything to the contrary contained in this Section 2, if the Company receives
Commission Comments, and following discussions with and responses to the
Commission in which the Company uses its reasonable best efforts and time to
cause as many Registrable Securities for as many Holders as possible to be
included in the Registration Statement filed pursuant to Section 2(a) without
characterizing any Holder as an underwriter (and in such regard uses its
reasonable best efforts to cause the Commission to permit the affected Holders
or their respective counsel to participate in Commission conversations on such
issue together with Company Counsel, and timely conveys relevant information
concerning such issue with the affected Holders or their respective counsel),
the Company is unable to cause the inclusion of all Registrable Securities,
then
the Company may, following not less than three (3) Trading Days prior written
notice to the Holders (i) remove from the Registration Statement such
Registrable Securities (the “Cut
Back Shares”)
and/or
(ii) agree to such restrictions and limitations on the registration and resale
of the Registrable Securities, in each case as the Commission may require in
order for the Commission to allow such Registration Statement to become
effective; provided,
that in
no event may the Company name any Holder as an underwriter without such Holder’s
prior written consent (collectively, the “SEC
Restrictions”).
Unless the SEC Restrictions otherwise require, any cut-back imposed pursuant
to
this Section 2(b) shall be allocated first to the Placement Agent Warrant
Shares, second among the Warrant Shares of the Holders on a pro rata basis
and
then among the Shares and the Conversion Shares of the Holders on a pro rata
basis. No liquidated damages under Section 2(c) shall accrue on or as to any
Cut
Back Shares, and the required Effectiveness Date for such Registration Statement
will be tolled, until such time as the Company is able to effect the
registration of the Cut Back Shares in accordance with any SEC Restrictions
(such date, the “Restriction
Termination Date”).
From
and after the Restriction Termination Date, all provisions of this Section
2
(including, without limitation, the liquidated damages provisions, subject
to
tolling as provided above) shall again be applicable to the Cut Back Shares
(which, for avoidance of doubt, retain their character as “Registrable
Securities”) so that the Company will be required to file with and cause to be
declared effective by the Commission such additional Registration Statements
in
the time frames set forth herein as necessary to ultimately cause to be covered
by effective Registration Statements all Registrable Securities (if such
Registrable Securities cannot at such time be resold by the Holders thereof
without volume limitations pursuant to Rule 144).
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(c) If:
(i) a
Registration Statement is not filed on or prior to its Filing Date covering
the
Registrable Securities required under this Agreement to
be
included therein (if the Company files a Registration Statement without
affording the Holders the opportunity to review and comment on the same as
required by Section 3(a) hereof, the Company shall not be deemed to have
satisfied this clause (i)), or (ii) a Registration Statement is not declared
effective by the Commission on or prior to its required Effectiveness Date
or if
by the Business Day immediately following the Effective Date, the Company shall
not have filed a “final” prospectus for the Registration Statement with the
Commission under Rule 424(b) in accordance with the terms hereof (whether or
not
such a prospectus is technically required by such Rule), or (iii) after its
Effective Date, without regard for the reason thereunder or efforts therefor,
such Registration Statement ceases for any reason to be effective and available
to the Holders as to all Registrable Securities to which it is required to
cover
at any time prior to the expiration of its Effectiveness Period for more than
an
aggregate of 45 Trading Days (which need not be consecutive) (any such failure
or breach being referred to as an "Event,"
and for
purposes of clauses (i) or (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such 45 Trading Day-period is exceeded,
being referred to as "Event
Date"),
then
in addition to any other rights the Holders may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of
each
such Event Date (if the applicable Event shall not have been cured by such
date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as partial liquidated damages and not as a penalty, equal to
(A)
with respect to any Holder other than a Holder of the Conversion Shares, 1.0%
of
the aggregate Investment Amount paid by such Holder for Shares pursuant to
the
Purchase Agreement and (B) with respect to any Holder of the Conversion Shares,
1.0% of the aggregate amount of the Conversion Shares (the “Conversion
Amount”)
held
by such Holder, which amount shall be computed by multiplying the aggregate
number of the Conversion Shares held by such Holder by the Conversion Rate
(as
defined in the Indenture). The
parties agree that (1) the Company will not be liable for liquidated damages
under this Agreement with respect to any (i) warrants issued to any placement
agent as compensation in connection with the financing that is the subject
of
the Purchase Agreement or (ii) Placement Agent Warrant Shares and (2) in no
event will the Company be liable for liquidated damages under this Agreement
in
excess of 1.0% of the sum of the aggregate Investment Amount and the aggregate
Conversion Amount of the Holders in any 30 calendar
day period and the maximum aggregate liquidated damages payable to a Holder
under this Agreement shall be twelve percent (12%) of the aggregate Investment
Amount paid by such Holder pursuant to the Purchase Agreement or (ii) the
aggregate Conversion Amount paid or payable by such Holder, as
applicable.
The
partial liquidated damages pursuant to the terms hereof shall apply on a daily
pro-rata basis for any portion of a month prior to the cure of an Event and
in
such case shall be due and payable no later than the third Trading Day after
the
date the Event is cured, (except in the case of the first Event Date), and
shall
cease to accrue (unless earlier cured) upon the expiration of the Effectiveness
Period. If the Company fails to pay any liquidated damages pursuant to this
section in full within seven days after the date payable, the Company will
pay
interest thereon at a rate of 15% per annum (or such lesser maximum amount
that
is permitted to be paid by applicable law) to the Holder, accruing daily from
the date such liquidated damages are due until the amounts, plus interest
thereon, are paid in full.
(d) Each
Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex
B
(a
“Selling
Holder Questionnaire”).
Notwithstanding anything to the contrary contained herein, the Company shall
not
be required to include the Registrable Securities of a Holder in a Registration
Statement and shall not be required to pay any liquidated or other damages
under
Section 2(c) to (i) any Holder who fails to furnish to the Company a fully
completed Selling Holder Questionnaire at least three Trading Days prior to
the
Filing Date (subject to the requirements set forth in Section 3(a)) and (ii)
any Holder
who is a broker dealer who refuses to be named as an underwriter in the
Registration Statement following a request by the Commission requiring such
Holder to be named as an underwriter in the Registration Statement.
3. Registration
Procedures.
In
connection with the Company's registration obligations hereunder, the Company
shall:
6
(a) Not
less
than four Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Company shall
furnish to each Holder copies of the Registration Statement, as proposed to
be
filed which will be subject to the review of such Holder. Each Holder shall
have
two Trading Days in which to provide its comments to the Registration Statement.
The Company shall not file a Registration Statement, any Prospectus or any
amendments or supplements thereto which differs from the disclosure received
from a Holder in its Selling Holder Questionnaire (as amended or supplemented).
The Company shall not file a Registration Statement, any Prospectus or any
amendments or supplements thereto in which it (i) characterizes any Holder
as an underwriter, (ii) excludes a particular Holder due to such Holder
refusing to be named as an underwriter (except as otherwise permitted in Section
2(b)), or (iii) reduces the number of Registrable Securities being
registered on behalf of a Holder except pursuant to, in the case of subsection
(iii), the Commission Comments, without, in each case, such Holder’s express
written authorization.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its 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
each Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to such Registration
Statement that would not result in the disclosure to the Holders of material
and
non-public information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the Registration Statement(s) and the disposition of all Registrable
Securities covered by each Registration Statement.
(c) Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing and, in the case
of
(v) below, not less than three Trading Days prior to the financial statements
in
any Registration Statement becoming ineligible for inclusion therein) and (if
requested by any such Person) confirm such notice in writing no later than
one
Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed
to be 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 (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the Holders
that pertain to the Holders as a Selling Stockholder or to the Plan of
Distribution, but not information which the Company believes would constitute
material and non-public information); and (C) with respect to each 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 a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a 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 a Registration Statement ineligible for
inclusion therein or any statement made in such 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
such
Registration Statement, Prospectus or other documents so that, in the case
of
such 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,
provided that any written notice pursuant to clause (v) above that contains
or
may contain material non-public information may, at the option of a Holder,
be
delivered only to, such Holders legal counsel at the address provided to the
Company by such Holder.
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(d) Use
its
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a 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) 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.
(f) Prior
to
any public offering of Registrable Securities, register or qualify such
Registrable Securities for offer and sale under the securities or Blue Sky
laws
of all jurisdictions within the United States as any Holder may request, 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 the Registration Statement(s).
(g) 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(s), which certificates shall be free,
to
the extent permitted by the Purchase Agreement, of all restrictive legends,
and
to enable such Registrable Securities to be in such denominations and registered
in such names as any such Holders may request.
(h) 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 affected Registration Statements 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, no Registration Statement nor any 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.
4. Reports
Under the Exchange Act.
With
a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Holders to sell securities of the
Company to the public without registration ("Rule
144"),
the
Company agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
8
(b) file
with
the Commission in a timely manner all reports and other documents required
of
the Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
(c) furnish
to each Holder so long as such Holder owns Registrable Securities, promptly
upon
request, (i) a written statement by the Company, if true, that it has complied
with the reporting requirements of Rule 144, the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the Holders to sell
such securities pursuant to Rule 144 without registration.
5. Registration
Expenses.
All
fees and expenses incidental 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 a 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 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.
6. Indemnification.
9
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, agents, investment advisors,
partners, members 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 costs of preparation and reasonable
attorneys' fees) and expenses (collectively, "Losses"),
as
incurred, arising out of or relating to (i) any violations by the Company of
the
Securities Act, Exchange Act or any state securities law or any rule or
regulation thereunder in connection with the performance of its obligations
to
register securities under this Agreement or (ii) 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 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 (1) 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 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 an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission
giving rise to such Loss would have been corrected. 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, arising solely 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 statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, 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 not misleading to the
extent, but only to the extent that, (1) 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 (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto 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
an Advice or an amended or supplemented Prospectus, but only if and to the
extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have
been
corrected. 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.
10
(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 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; (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 Indemnified Party 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. 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.
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 twenty Trading 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 Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it
is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
11
(d) Contribution.
If a
claim for indemnification under Section 6(a) or 6(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 Section 6(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.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(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 6(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.
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.
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, 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) No
Piggyback on Registrations.
Except
as and to the extent specified in Schedule
3.1(v)
of the Purchase Agreement, neither
the
Company nor any of its security holders (other than the Holders in such capacity
pursuant hereto) may include securities of the Company in a Registration
Statement other than the Registrable Securities, and the Company shall not,
from
the date hereof until the expiration of the Effectiveness Period, enter into
any
agreement providing any such right to any of its security holders.
(c) 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.
12
(d) 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 may provide appropriate stop orders to
enforce the provisions of this paragraph.
(e) Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and 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, then the Company
shall send to each Holder written notice of such determination and, if within
fifteen calendar days after receipt of such notice, any such Holder shall so
request in writing, the Company shall include in such registration statement,
on
a prorated basis, all or any part of such Registrable Securities such holder
requests to be registered, subject to customary underwriter cutbacks applicable
to all holders of registration rights.
(f) Rule
144 Compliance.
As long
as any Holder owns any Registrable Securities, the Company will apply its best
efforts to file with the SEC in a timely manner (or obtain extensions in respect
thereof and file within the applicable grace period) all reports and other
documents required of the Company under the Securities Act and Exchange Act
and,
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.
13
(g) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this Section 7(g),
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 no less than sixty six and two
thirds (66 2/3%) percent of the then outstanding Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
certain Holders and that does not directly or indirectly affect the rights
of
other Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates; provided,
further
that no amendment or waiver to any provision of this Agreement relating to
naming any Holder or requiring the naming of any Holder as an underwriter may
be
effected in any manner without such Holder’s prior written consent. Section 2(a)
may not be amended or waived except by written consent of each Holder affected
by such amendment or waiver.
(h) 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 earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
on
any Trading Day, (c) the Trading Day following the date of mailing, if sent
by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
If
to the Company:
|
Fushi
International, Inc.
|
|
1
Shuang Qiang Road
|
||
Jinzhou,
Dalian 116100
|
||
|
People's
Republic of China
|
|
Facsimile:
[ ]
|
||
Attention:
President
|
||
With
a copy to:
|
Weil,
Gotchal &
Xxxxxx XXX
|
|
Xxxxx
00, Xxxxx 0, 00xx Xxxxx
|
||
1366
Xxxxxxx Xxxx Xxxx
|
||
Xxxxxxxx
000000
|
||
Xxxxxx'x
Xxxxxxxx of China
|
||
Facsimile:
x00
0000 0000
|
||
Attn.:
Xxxxx
Xxxxxxxx, Esq.
|
If to a Investor: |
To
the address set forth under such Investor's name on the signature
pages
hereto.
|
If
to any
other Person who is then the registered Holder:
To the address of such Holder as it appears in the stock transfer books of the Company |
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
14
(i) 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. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder other than a Holder of
the
Conversion Shares may assign its respective rights hereunder in the manner
and
to the Persons as permitted under the Purchase Agreement, and each Holder which
is a Holder of the Conversion Shares may assign its respective rights hereunder
in the manner and to the Persons as permitted under the Indenture.
(j) 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.
(k) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective Affiliates, employees or agents) will be commenced in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert
in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) 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 contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
Proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce
any
provisions of this Agreement, then the prevailing party in such Proceeding
shall
be reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.
(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 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 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.
15
(n) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(o) Independent
Nature of Investors' Obligations and Rights.
The
obligations of each Investor under this Agreement are several and not joint
with
the obligations of each other Investor, and no Investor shall be responsible
in
any way for the performance of the obligations of any other Investor under
this
Agreement. Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute
the
Investors as a partnership, an association, a joint venture or any other kind
of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement or any other Transaction Document. Each Investor
acknowledges that no other Investor will be acting as agent of such Investor
in
enforcing its rights under this Agreement. Each Investor shall be entitled
to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement, and it shall not be necessary for any
other Investor to be joined as an additional party in any Proceeding for such
purpose. The Company acknowledges that each of the Investors has been provided
with the same Registration Rights Agreement for the purpose of closing a
transaction with multiple Investors and not because it was required or requested
to do so by any Investor.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES TO FOLLOW]
16
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
FUSHI INTERNATIONAL, INC. | ||
|
|
|
By: | ||
Name: |
||
Title: |
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES OF INVESTORS TO FOLLOW]
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
NAME
OF INVESTING ENTITY
____________________________________
By:
__________________________________
Name:
Title:
ADDRESS
FOR NOTICE
c/o:
______________________________________
Street:
____________________________________
City/State/Zip:
______________________________
Attention:
_________________________________
Tel:
______________________________________
Fax:
______________________________________
Email:
_____________________________________
Annex
A
Plan
of
Distribution
The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or quoted or in private transactions. These sales
may be at fixed or negotiated prices. The Selling Stockholders may use any
one
or more of the following methods when selling shares:
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits Investors;
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
·
|
privately
negotiated transactions;
|
·
|
to
cover short sales made after the date that this Registration Statement
is
declared effective by the Commission;
|
·
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
·
|
a
combination of any such methods of sale;
and
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of Common Stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.
Upon
the
Company being notified in writing by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common
Stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and
of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such the shares of Common Stock were sold, (iv)the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference
in
this prospectus, and (vi) other facts material to the transaction. In addition,
upon the Company being notified in writing by a Selling Stockholder that a
donee
or pledgee intends to sell more than 500 shares of Common Stock, a supplement
to
this prospectus will be filed if then required in accordance with applicable
securities law.
The
Selling Stockholders also may transfer the shares of Common Stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this
prospectus.
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of
the
Securities Act in connection with such sales. In such event, any commissions
received by such 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. Discounts, concessions, commissions and
similar selling expenses, if any, that can be attributed to the sale of
Securities will be paid by the Selling Stockholder and/or the purchasers. Each
Selling Stockholder has represented and warranted to the Company that it
acquired the securities subject to this Registration Statement in the ordinary
course of such Selling Stockholder’s business and, at the time of its purchase
of such securities such Selling Stockholder had no agreements or understandings,
directly or indirectly, with any person to distribute any such securities.
The
Company has advised each Selling Stockholder that it may not use shares
registered on this Registration Statement to cover short sales of Common Stock
made prior to the date on which this Registration Statement shall have been
declared effective by the Commission. If a Selling Stockholder uses this
prospectus for any sale of the Common Stock, it will be subject to the
prospectus delivery requirements of the Securities Act. The Selling Stockholders
will be responsible to comply with the applicable provisions of the Securities
Act and Exchange Act, and the rules and regulations thereunder promulgated,
including, without limitation, Regulation M, as applicable to such Selling
Stockholders in connection with resales of their respective shares under this
Registration Statement.
The
Company is required to pay all fees and expenses incident to the registration
of
the shares, but the Company will not receive any proceeds from the sale of
the
Common Stock. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
Annex
B
FUSHI
INTERNATIONAL, INC.
Selling
Securityholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the “Common
Stock”),
of
Fushi International, Inc., a Nevada corporation (the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”)
a
Registration Statement for the registration and resale of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement,
dated as of October 26, 2007 (the “Registration
Rights Agreement”),
among
the Company and the Investors named therein. A copy of the Registration Rights
Agreement is available from the Company upon request at the address set forth
below. All capitalized terms used and not otherwise defined herein shall have
the meanings ascribed thereto in the Registration Rights Agreement.
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
1.
|
Name.
|
|
(a)
|
Full
Legal Name of Selling Securityholder
|
|
(b)
|
Full
Legal Name of Registered Holder (if not the same as (a) above)
through
which Registrable Securities Listed in Item 3 below are
held:
|
|
(c)
|
Full
Legal Name of Natural Control Person (which means a natural person
who
directly or indirectly alone or with others has power to vote or
dispose
of the securities covered by the questionnaire):
|
|
2.
Address for Notices to Selling Securityholder:
Telephone:
|
|
Fax:
|
|
Contact
Person:
|
21
3.
Beneficial Ownership of Registrable Securities:
Type
and Principal Amount of Registrable Securities beneficially
owned:
|
|
4.
Broker-Dealer Status:
(a)
|
Are
you a broker-dealer?
|
Yes
o
No
o
Note:
|
If
yes, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
(b)
|
Are
you an affiliate of a
broker-dealer?
|
Yes
o
No
o
(c)
|
If
you are an affiliate of a broker-dealer, do you certify that you
bought
the Registrable Securities in the ordinary course of business, and
at the
time of the purchase of the Registrable Securities to be resold,
you had
no agreements or understandings, directly or indirectly, with any
person
to distribute the Registrable
Securities?
|
Yes
o
No
o
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
5.
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.
Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
Type
and Amount of Other Securities beneficially owned by the
Selling Securityholder:
|
||
6.
Relationships with the Company:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
State
any
exceptions here:
7.
The
Company has advised each Selling Stockholder that it may not use shares
registered on the Registration Statement to cover short sales of Common Stock
made prior to the date on which the Registration Statement is declared effective
by the Commission, in accordance with 1997 Securities and Exchange Commission
Manual of Publicly Available Telephone Interpretations Section A.65. If a
Selling Stockholder uses the prospectus for any sale of the Common Stock, it
will be subject to the prospectus delivery requirements of the Securities Act.
The Selling Stockholders will be responsible to comply with the applicable
provisions of the Securities Act and Exchange Act, and the rules and regulations
thereunder promulgated, including, without limitation, Regulation M, as
applicable to such Selling Stockholders in connection with resales of their
respective shares under the Registration Statement.
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the Effective Date for the Registration Statement.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
Dated: |
Beneficial
Owner:
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|
|
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By: | ||
Name: |
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Title:
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23
PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:
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