EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of October 28, 2005, by and between El Capitan Precious Metals, Inc., a Nevada
corporation (the "Company"), and Whitebox Intermarket Partners, L.P., a British
Virgin Islands limited partnership ("WIP" or the "Investor").
R E C I T A L S :
WHEREAS, the Company has entered into that certain Purchase Agreement,
dated as of the date hereof (the "Purchase Agreement") with WIP pursuant to
which the Company has agreed to issue and sell to WIP a secured convertible
promissory note (the "Note") and a warrant (the "Warrant") to purchase shares of
the Company's Common Stock, $0.001 par value per share (the "Common Stock");
WHEREAS, as part of the Purchase Agreement, the Company has granted to WIP
and its affiliates an option to purchase an additional secured convertible
promissory note in the aggregate principal amount of up to $550,000 (the
"Additional Note") and an additional warrant to purchase up to 366,667 shares of
Common Stock (the "Additional Warrant");
WHEREAS, the execution of this Agreement is a condition precedent to the
obligation of WIP to perform its obligations under the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the following respective
meanings:
1.1 "Commission" shall mean the U.S. Securities and Exchange Commission or
any other successor federal agency at the time administering the Securities Act.
1.2 "Common Stock" shall mean the Company's common stock, $0.001 par value
per share.
1.3 "Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.4 "Holders" shall mean and include the Investor, beneficial owners of
the Additional Note and Additional Warrant and any transferee thereof to whom
the registration rights conferred by this Agreement have been transferred in
accordance with Article 8 hereof.
1.5 "Register," "registered" and "registration" refer to a registration
effected by preparing and filing with the Commission a registration statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such registration statement.
1.6 "Registrable Securities" means (i) all shares of Common Stock issued
or issuable upon conversion of the Note or the Additional Note or upon payment
on the Note or Additional Note; (ii) all shares of Common stock issued or
issuable upon exercise of the Warrant or the Additional Warrant; and (iii) any
and all shares of Common Stock issuable upon any stock split, stock dividend,
recapitalization, reclassification, merger, consolidation or other similar event
with respect to the Common Stock issued or issuable pursuant to subsections (i)
or (ii) of this Section 1.6. The term "Registrable Securities" shall exclude in
all cases, however, such shares of Common Stock following sale by a Holder to
the public pursuant to a registered offering or pursuant to Rule 144 promulgated
under the Securities Act or sold in a private transaction in which the Holder's
registration rights under this Agreement are not assigned.
1.7 "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Articles 2 and 3 hereof, including, without
limitation, all registration, qualification and Commission, National Association
of Securities Dealers, Inc., stock exchange and other filing fees, printing
expenses, duplication expenses relating to copies of any registration statement
or prospectus delivered to any Holders, escrow fees, fees and disbursements of
legal counsel for the Company, blue sky fees and expenses, and the expense of
any audits incident to or required by any such registration (but excluding the
compensation of employees and officers of the Company, which shall be paid in
any event by the Company).
1.8 "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
1.9 "Selling Expenses" shall mean all underwriting fees, discounts,
selling commissions and stock transfer taxes applicable to the Registrable
Securities registered by the Holders and the fees and expenses of any special
counsel engaged by the Holders.
1.10 "Underwriter" shall mean (whether or not the term is capitalized) a
broker-dealer engaged by the Company to distribute Registrable Securities as
principal or agent.
1.11 "Underwriting" or "Underwritten" shall mean (whether or not the term
is capitalized) a method of publicly distributing securities through an
Underwriter.
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ARTICLE 2
REQUIRED REGISTRATION
2.1 Required Registration. Unless a majority in interest of the Holders
consent to an extension of the filing date or effective date for up to an
additional 60 days and in such case, upon expiration of such extended period,
the Company will prepare and file with the Commission within 30 days after the
date hereof a registration statement under the Securities Act covering all of
the Registrable Securities and use its best efforts to obtain the effectiveness
of such registration statement as soon as practicable but not later than 120
days after the date hereof as would permit or facilitate the original issuance
or subsequent resale and distribution of all of such Registrable Securities.
Such registration statement shall contain (unless the Holders otherwise direct)
substantially the "Plan of Distribution" attached hereto as Annex A. The
Company's failure to file such registration statement within 30 days after the
date hereof (or, if the filing date is extended as provided above, the
expiration date of such extended period) or to obtain effectiveness of such
registration statement within 120 days after the date hereof (or, if the
effective date is extended as provided above, the expiration date of such
extended period) will commence the running of the first "Failure Term" as
defined in Section 5 of the Note.
2.2 Underwriting.
(a) The resale distribution of the Registrable Securities covered by the
registration statement referred to in Section 2.1 above shall be effected by
means of the method of distribution selected by the Holders holding a majority
of the Registrable Securities covered by such registration. The Holders holding
a majority of the Registrable Securities may also change the resale distribution
method from time to time (subject to amendment of the registration statement as
required to describe such changes). If such distribution is effected by means of
an underwriting, the right of any Holder to registration pursuant to this
Article 2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein.
(b) If such distribution is effected by means of an underwriting, the
Company (together with all Holders proposing to distribute their securities
through such underwriting) shall enter into an underwriting agreement in
customary form with a managing underwriter of nationally recognized standing
selected for such underwriting by a majority in interest of the Holders and
approved by the Company, which approval shall not be unreasonably withheld.
(c) If any Holder disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company, the
managing underwriter and the other Holders. The Registrable Securities and/or
other securities so withdrawn shall also be withdrawn from registration.
2.3 Inclusion of Shares by the Company. If the resale distribution of
Registrable Securities is being effected by means of an underwriting and if the
managing underwriter will not limit the number of Registrable Securities to be
underwritten, the Company may include securities for its own account or for the
account of others in such registration if the managing underwriter so agrees.
The inclusion of such shares shall be on the same terms as the registration of
shares held by the Holders. In the event that the underwriters exclude some of
the securities to be registered, the securities to be sold for the account of
the Company and any other holders shall be excluded in their entirety prior to
the exclusion of any Registrable Securities.
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ARTICLE 3
COMPANY REGISTRATION
3.1 Notice of Registration to Holders. If, at any time after the date
hereof, the Company shall determine to register any of its securities, either
for its own account or the account of a security holder or holders, other than
(i) a registration relating solely to employee benefit plans on Form S-8 (or any
successor form) or (ii) a registration relating solely to a Commission Rule 145
transaction on Form S-4 (or any successor form), the Company will:
(a) promptly give to each Holder written notice thereof and
(b) include in such registration (and any related qualification under blue
sky laws or other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made within
30 days after receipt of such written notice from the Company described in
Section 3.1(a), by any Holder or Holders, subject to any reductions in the
Registrable Securities to be registered made in the manner set forth in Section
3.2(a) below.
3.2 Underwriting. If the registration of which the Company gives notice is
for an offering involving an underwriting, the Company shall so advise the
Holders as a part of the written notice given pursuant to Section 3.1(a). In
such event, the right of any Holder to registration pursuant to this Article 3
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company.
(a) Notwithstanding any other provision of this Article 3, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the underwriter may exclude some or all
Registrable Securities from such registration and underwriting. The Company
shall so advise all Holders of Registrable Securities, and the number of shares
of Common Stock to be included in such registration shall be allocated as
follows: first, for the account of the Company, all shares of Common Stock
proposed to be sold by the Company; and second, for the account of the Holders
and any other shareholders of the Company participating in such registration,
the number of shares of Common Stock requested to be included in the
registration by the Holders and such other shareholders in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities that are
proposed to be offered and sold by the Holders and such other shareholders of
Registrable Securities at the time of filing the registration statement. No
Registrable Securities excluded from the underwriting in this Article 3 by
reason of the underwriters' marketing limitation shall be included in such
registration.
(b) The Company shall so advise all Holders and the other holders
distributing their securities through such underwriting of any such limitation,
and the number of shares of Registrable Securities held by Holders that may be
included in the registration. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration, but the Holder
shall continue to be bound by the terms hereof.
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(c) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Article 3 prior to the effectiveness of
such registration, whether or not a Holder has elected to include Registrable
Securities in such registration.
ARTICLE 4
EXPENSES OF REGISTRATION
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Articles 2 and 3 hereof and the
reasonable fees of one counsel for the Holders of Registrable Securities in the
case of registration pursuant to Article 2 hereof shall be borne by the Company;
provided, however, that any expenses incurred as a result of any amendment
described in Section 2.2(a) shall be borne by the Holders of the Registrable
Securities being registered in such registration. All Selling Expenses relating
to Registrable Securities registered by the Holders shall be borne by the
Holders of such Registrable Securities pro rata on the basis of the number of
shares so registered.
ARTICLE 5
REGISTRATION PROCEDURES
(a) In the case of each registration effected by the Company pursuant to
this Agreement, the Company will keep each Holder advised in writing as to the
initiation of each registration and as to the completion thereof. The Company
agrees to use its best efforts to effect or cause such registration to permit
the sale of the Registrable Securities covered thereby by the Holders thereof in
accordance with the intended method or methods of distribution thereof described
in such registration statement. In connection with any registration of any
Registrable Securities, the Company shall:
(i) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration statement filed to become effective, and maintain
the effectiveness of such registration statement until the earlier of (A)
six years after the date that the registration statement filed pursuant to
Section 2.1 is first declared effective by the Commission, (B) the date on
which all of the Registrable Securities covered by a registration
statement may be sold by the Holders pursuant to Rule 144(k) or (C) such
time as all of the Registrable Securities have been publicly sold pursuant
to a registration statement;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus included
therein as may be necessary to effect and maintain the effectiveness of
such registration statement as may be required by the applicable rules and
regulations of the Commission and the instructions applicable to the form
of such registration statement, and furnish to the holders of the
Registrable Securities covered thereby copies of any such supplement or
amendment prior to this being used and/or filed with the Commission;
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(iii) promptly notify the Holders of Registrable Securities to be
included in a registration statement hereunder, the sales or placement
agent, if any, therefor and the managing underwriter of the securities
being sold, and confirm such advice in writing, (A) when such registration
statement or the prospectus included therein or any prospectus amendment
or supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment,
when the same has become effective, (B) of the issuance by the Commission
of any stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that purpose, (C) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose or (D) if, to the Company's knowledge, it shall be the case,
at any time when a prospectus is required to be delivered under the
Securities Act, that such registration statement or prospectus, or any
document incorporated by reference in any of the foregoing, contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(iv) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto or of any order suspending or preventing
the use of any related prospectus or suspending the qualification of any
Registrable Securities included in such registration statement for sale in
any jurisdiction at the earliest practicable date;
(v) furnish to each Holder of Registrable Securities to be included
in such registration statement hereunder, each placement or sales agent,
if any, therefor and each underwriter, if any, thereof, without charge, a
conformed copy of such registration statement and any amendment and
supplement thereto (in each case including all exhibits and documents
incorporated by reference) and such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus), and any amendment or supplement
thereto, as such Holder, agent, if any, and underwriter, if any, may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder sold by such agent or
underwritten by such underwriter and to permit such Holder, agent and
underwriter to satisfy the prospectus delivery requirements of the
Securities Act;
(vi) use its best efforts to (A) register or qualify the Registrable
Securities to be included in such registration statement under such other
securities laws or blue sky laws of such states of the United States or
the District of Columbia to be designated by the Holders of a majority of
such Registrable Securities participating in such registration and each
placement or sales agent, if any, therefor and underwriter, if any,
thereof, as any Holder and each underwriter, if any, of the securities
being sold shall reasonably request (provided, that the Company shall not
be required to use its best efforts to register or qualify the Registrable
Securities in more than 15 such jurisdictions unless the expenses thereof
are borne by the Holders requesting such efforts), (B) keep such
registrations or qualifications in effect and comply with such laws at all
times during the period described in Section 5(a)(i) above, and (C) take
any and all such actions as may be reasonably necessary or advisable to
enable such Holder, agent, if any, and underwriter to consummate the
disposition in such jurisdictions of such Registrable Securities;
provided, however, that in order to fulfill the foregoing obligations
under this Section 5(a)(vi), the Company shall not (unless otherwise
required to do so in any jurisdiction) be required to (1) qualify
generally to do business as a foreign company or a broker-dealer, (2)
execute a general consent to service of process or (3) subject itself to
taxation; and
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(vii) furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities
are being sold through underwriters, or, if such securities are not being
sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated
as of such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (ii) a letter dated
as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any,
and if permitted by applicable accounting standards, to the Holders
requesting registration of Registrable Securities.
(b) The Company may require each Holder of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such Holder and such Holder's method of distribution of
such Registrable Securities as the Company may from time to time reasonably
request in writing. Each such Holder agrees to notify the Company as promptly as
practicable of any inaccuracy or change in information previously furnished by
such Holder to the Company or of the occurrence of any event in either case as a
result of which any prospectus relating to such registration contains or would
contain an untrue statement of a material fact regarding such Holder or the
distribution of such Registrable Securities or omits to state any material fact
regarding such Holder or the distribution of such Registrable Securities
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and promptly to furnish
to the Company any additional information required to correct and update any
previously furnished information or required so that such prospectus shall not
contain, with respect to such Holder or the distribution of such Registrable
Securities, an untrue statement or a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
(c) Each of the Holders will comply with the provisions of the Securities
Act with respect to disposition of the Registrable Securities to be included in
any registration statement filed by the Company.
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ARTICLE 6
INDEMNIFICATION
6.1 The Company will indemnify each Holder, each of its officers,
directors and partners, and such Holder's legal counsel and independent
accountants, if any, and each person controlling any such persons within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereof, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act or any state securities laws applicable to
the Company and relating to action or inaction by the Company in connection with
any such registration, qualification or compliance, and will reimburse each such
Holder, each of its officers, directors and partners and such Holder's legal
counsel and independent accountants, and each person controlling any such
persons, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by such Holder,
officers, directors, partners, legal counsel, accountants, underwriter or
controlling persons, and expressly intended for use in such registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereof.
6.2 Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and its legal counsel and independent accountants, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers, directors, partners, legal counsel and independent accountants, if
any, and each person controlling such Holder within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, partners, legal counsel,
independent accountants, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular, other document or amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Holder and expressly intended for use in such
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereof; provided, however, that the obligations of each
Holder hereunder shall be limited to an amount equal to the proceeds to such
Holder of Registrable Securities sold as contemplated herein.
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6.3 Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). The Indemnified Party may participate in such defense at such party's
expense; provided, however, that the Indemnifying Party shall bear the expense
of such defense of the Indemnified Party if representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest. The failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Agreement, unless such failure is prejudicial to the ability of the Indemnifying
Party to defend the action. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.
6.4 If the indemnification provided for in Section 6.1 or 6.2 is
unavailable or insufficient to hold harmless an Indemnified Party, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of the expenses, claims, losses, damages or
liabilities (or actions or proceedings in respect thereof) referred to in
Section 6.1 or 6.2, in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the sellers of Registrable Securities
on the other hand in connection with statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) or expenses, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the sellers of Registrable Securities and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Company and the
Holders agree that it would not be just and equitable if contributions pursuant
to this Section 6.4 were to be determined by pro rata allocation (even if all
Sellers of Registrable Securities were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in the first sentence of this Section 6.4.
The amount paid by an Indemnified Party as a result of the expenses, claims,
losses, damages or liabilities (or actions or proceedings in respect thereof)
referred to in the first sentence of this Section 6.4 shall be deemed to include
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any claim, action or proceeding which
is the subject of this Section 6.4. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of sellers of Registrable
Securities to contribute pursuant to this Section 6.4 shall be several in
proportion to the respective amount of Registrable Securities sold by them
pursuant to a registration statement.
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ARTICLE 7
RULE 144 REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of
securities of the Company to the public without registration, the Company agrees
to use its best efforts to:
7.1 Make and keep public information regarding the Company available as
those terms are understood and defined in Rule 144 under the Securities Act, at
all times after the date hereof; and
7.2 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.
ARTICLE 8
TRANSFER OF REGISTRATION RIGHTS
The rights to cause the Company to register Registrable Securities under
this Agreement may be assigned by a Holder to Whitebox Advisors, LLC
("Whitebox") or to a transferee or assignee of Registrable Securities that (i)
is a subsidiary, parent or affiliated entity, general partner or limited
partner, member or retired partner or member of a Holder or of Whitebox, (ii) is
an affiliated fund, a follow-on fund or predecessor fund of a Holder or a
related fund or of Whitebox, (iii) is a Holder's family member or trust for the
benefit of an individual Holder or (iv) acquires at least 50,000 shares of
Registrable Securities (as adjusted for stock splits, stock dividends, stock
combinations, reclassifications, recapitalizations, mergers, consolidations or
other similar events); provided, however, (A) the transferor shall, within ten
days before such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned and (B) such transferee shall agree
in writing to be subject to all restrictions set forth in this Agreement. In
each case, such rights may only be transferred together with the underlying
Registrable Securities in a transfer permitted by the Securities Act and
applicable state securities laws. Any such transferee or assignee shall be
deemed a Holder hereunder.
ARTICLE 9
LIMITATIONS ON REGISTRATION RIGHTS GRANTED TO OTHER SECURITIES
From and after the date of this Agreement, the Company shall not without
the prior written consent of the holders of a majority of the Registrable
Securities then outstanding, enter into any agreement with any holder or
prospective holder of any securities of the Company providing for the grant to
such holder of registration rights superior to those granted herein.
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ARTICLE 10
MISCELLANEOUS
10.1 Governing Law. The laws of the state of Minnesota shall govern the
interpretation, validity and performance of the terms of this agreement,
regardless of the law that might be applied under principles of conflicts of
law.
10.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of each of the parties hereto and shall inure
to the benefit of and be binding upon each Holder of any Registrable Securities.
10.3 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
10.4 Termination. The obligations of the Company to register Registrable
Securities under this Agreement shall terminate on the tenth anniversary of the
date of this Agreement. In addition, the right of any Holder to request
inclusion in any registration under Article 3 shall terminate on the date
hereafter when (i) such Holder (together with its affiliates, partners, members
and former partners and members) holds less than 1% of the Company's outstanding
Common Stock and (ii) all Registrable Securities held by or issuable to such
Holder (and its affiliates, partners, members and former partners and members)
upon conversion of, or payment on, the Note or Additional Note or upon exercise
of the Warrant or Additional Warrant may be sold under Rule 144 during any 90
day period.
10.5 Notices. All notices, requests, consents, and other communications
hereunder shall be made in writing and shall be deemed given (i) when made if
made by hand delivery, (ii) one business day after being deposited with an
overnight courier if made by a courier guaranteeing overnight delivery, (iii) on
the date indicated on the notice of receipt if made by first-class mail, return
receipt requested, or (iv) upon confirmation if made by telecopier, addressed as
follows:
(a) if to the Company, at
El Capitan Precious Metals, Inc.
00000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, President and Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
11
(b) if to the Investor, in care of:
Whitebox Advisors, LLC
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxx Xxxx, Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxx P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(c) if to a Holder, to the address reflected on the records of the
Company, or such other address or addresses as shall have been furnished in
writing by such party to the Company and to the other parties to this Agreement.
10.6 Severability. The invalidity, illegality or unenforceability of one
or more of the provisions of this Agreement in any jurisdiction shall not affect
the validity, legality or enforceability of the remainder of this Agreement in
such jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
10.7 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
constitute one instrument.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed and delivered as of the date first written
above.
EL CAPITAN PRECIOUS METALS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxx
Its President and Chief Executive Officer
WHITEBOX INTERMARKET PARTNERS, L.P.
By: /s/ Xxxxxxxx Xxxx
-----------------------------------------
Xxxxxxxx Xxxx
Its CFO/Director
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ANNEX A
PLAN OF DISTRIBUTION
We are registering the shares offered by this prospectus on behalf of the
selling shareholders. The selling shareholders, which as used herein includes
donees, pledgees, transferees or other successors-in-interest selling shares of
common stock or interests in shares of common stock received after the date of
this prospectus from a selling shareholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of common stock or interests in
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.
The selling shareholders may use any one or more of the following methods
when disposing of shares or interests therein:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o 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;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
o broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling shareholders may, from time to time, pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the 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
amending the list of selling shareholders to include the pledgee, transferee or
other successors in interest as selling shareholders under this prospectus. The
selling shareholders 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.
In connection with the sale of our common stock or interests therein, the
selling shareholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The selling
shareholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
shareholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling shareholders from the sale of the
common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling shareholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon
any exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
The selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of
that rule.
The selling shareholders and any broker-dealers that act in connection
with the sale of securities might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
such broker-dealers and any profit on the resale of the securities sold by them
while acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act.
To the extent required, the shares of our common stock to be sold, the
names of the selling shareholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this
prospectus.
In order to comply with the securities laws of some states, if applicable,
the common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states the common stock may
not be sold unless it has been registered or qualified for sale or an exemption
from registration or qualification requirements is available and is complied
with.
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We have advised the selling shareholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling shareholders and their affiliates.
In addition, we will make copies of this prospectus (as it may be supplemented
or amended from time to time) available to the selling shareholders for the
purpose of satisfying the prospectus delivery requirements of the Securities
Act. The selling shareholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We have agreed to indemnify the selling shareholders against liabilities,
including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus.
We have agreed with the selling shareholders to keep the registration
statement that includes this prospectus effective until the earlier of (1) such
time as all of the shares covered by this prospectus have been disposed of
pursuant to and in accordance with the registration statement or (2) the date on
which the shares may be sold pursuant to Rule 144(k) of the Securities Act.
3
