EXHIBIT 99.5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
November 16, 2001, by and between DALECO RESOURCES CORPORATION, a Delaware
Corporation whose principal place of business is 000 Xxxxx Xxxxxx Xxxxxx, Xxxx
Xxxxxxx, Xxxxxxxxxxxx, 00000 ("Company") and Sumitomo Corporation of America, a
New York corporation whose principal place of business is 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000 ("SCOA"), and is being entered into pursuant to that
certain Stock Purchase Agreement dated November 16, 2001, between the Company
and SCOA ("Stock Agreement").
1. DEFINITIONS. For purposes of this Agreement:
(a) The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document;
(b) The term "Registrable Securities" means the Common Stock issued
to SCOA upon its exercise of any of its rights granted to SCOA by the Stock
Agreement;
(c) The term "Holder" or "Holders" means any person or persons
owning or having the right to acquire Registrable Securities or any permitted
assignee thereof;
(d) The term "Common Stock" means the common stock of the Company,
par value $.01; and
(e) The term "Conversion Right" means SCOA's right to have Common
Stock issued to SCOA in accordance with the provisions of the Stock Agreement,
whether directly upon purchase of Common Stock or by subsequent exercise of a,
SCOA Warrant and/or warrants issued pursuant to the Marketing Agreement.
2. DEMAND REGISTRATION.
(a) If the price of Common Stock equals or exceeds $2.50 per share
for thirty (30) consecutive days at any time after the exercise of a Conversion
Right, a Holder of Registrable Securities with a market value of not less than
$500,000 may notify the Company in writing that it demands that the Company file
a registration statement under the Act covering the registration of all of the
Holder's Registrable Securities. Within ten days of receipt of such notice, the
Company shall give written notice of such request to all Holders of Registrable
Securities, should there be more than one. The Holders shall give the Company
written election of their intention to have the Registrable Securities owned by
them included in such a registration statement within ten (10) days of receipt
of the Company's notice. The Company shall, subject to the limitations of
subsection 2(b), effect as soon as practicable, and in any event within 120 days
of the receipt of a Holder's request, a registration of all Registrable
Securities which the Holder, or Holders have requested be made part of such
registration statement ("Demand Registration").
(b) If a Holder whose shares are included in the Demand Registration
intends to distribute the Registrable Securities covered by his/her/its request
by means of an underwriting, he/she/it shall so advise the Company as a part of
his/her/its request made pursuant to Section 2(a) above. In such event, the
right of any Holder to include his/her/its Registrable Securities in such
registration 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 Registrable Securities through such underwriting shall (together with the
Company as provided in Section 6) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company and reasonably acceptable to such Holders
participating in such a Demand Registration.
(c) The Company is obligated to effect two Demand Registrations
pursuant to Section 2 of this Agreement regardless of whether the Holder has
elected to exercise all of its Conversion Rights. The Company agrees to include
all Registrable Securities then held by the Holder in such registration
statement without cutback or reduction.
(1) Other than as set forth in Paragraph 2(c)(2) below, the
Holder will not be entitled to demand a registration under this Paragraph 2(c)
within two (2) years of a prior registration of Common Stock by the Company in
which the Holder had a right to have the Registrable Securities registered.
(2) In the event the Company breaches its obligation of the
preceding sentences, any Holder of a Registrable Security which was to have been
included in such registration statement but was not shall be entitled to an
additional Demand Registration for such excluded securities and the Company
shall keep such registration statement effective as required by this Agreement.
3. PIGGYBACK REGISTRATION. If the Demand Registration described
in Section 2 has not yet been requested, and if (but without any obligation to
do so) the Company proposes to register any of its Common Stock under the Act
whether pursuant to a demand registration by a third party or otherwise (other
than a registration relating solely to the sale of securities to participants in
a Company stock plan or a registration on Form S-4 promulgated under the Act or
any successor or similar form registering stock issuable upon a
reclassification, upon a business combination involving an exchange of
securities or upon an exchange offer for securities of the issuer or another
entity), the Company shall exercise its reasonable efforts, subject to all
limitations and restrictions set forth in this Agreement, to include in such
registration, to the extent requested by the Holders, any Registrable Securities
not yet registered pursuant to this Agreement. The Company shall promptly give
each Holder written notice of the Company's intention to conduct such a
registration ("Registration Notice"). Each Holder shall respond to the
Registration Notice, in writing, with ten (10) days of its receipt stating the
number and intended method of disposition, if any, of the Registrable Securities
that each such Holder requests be included in such registration ("Piggyback
Registration").
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4. LIMITATION ON OBLIGATIONS TO REGISTER.
(a) In the case of a Piggyback Registration or an underwritten
public offering by the Company, if the managing underwriter determines and
advises in writing that the inclusion in the registration of all securities
which persons holding securities that have piggyback registration rights have
requested be included therein would interfere with the successful marketing of
the securities proposed to be registered by the Company, then the number of such
Registrable Securities which the Holders entitled to participate in a Piggyback
Registration have requested be included in such a registration shall be
allocated among all persons holding securities that have piggyback registration
rights on a pro-rata basis.
(b) Notwithstanding anything to the contrary herein, the Company
shall have the right (i) to defer the initial filing or request for acceleration
of effectiveness of any Demand Registration or Piggyback Registration, or (ii)
after effectiveness, to suspend effectiveness of any such registration
statement, if, in the good faith judgment of the board of directors of the
Company and upon the advice of counsel to the Company, such delay in filing or
requesting acceleration of effectiveness or such suspension of effectiveness is
necessary in light of the existence of material non-public information
(financial or otherwise) the disclosure of which at the time is not, in the
opinion of the board of directors of the Company upon the advice of counsel, (A)
otherwise required and (B) in the best interests of the Company; provided
however that the Company will not delay or suspend effectiveness of such
registration for more than three months from the date of the demand unless it is
then engaged in an acquisition that would make such registration impracticable,
in which case it will use its best efforts to eliminate such impracticability as
soon as possible.
(c) The Company is not obligated to effect a Demand Registration
if, in the opinion of counsel to the Company reasonably acceptable to the person
or persons from whom written request for a Demand Registration has been received
(and satisfactory to the Company's transfer agent to permit the transfer), that
registration under the Act is not required for the immediate transfer of the
Registrable Securities (with no further restrictions on resale) pursuant to Rule
144 or other applicable provision.
5. OBLIGATIONS TO INCREASE AVAILABLE SHARES. In the event that
the number of shares available under a Demand Registration statement is
insufficient to cover all of the Registrable Securities requesting registration
under Section 2(a), the Company shall amend that registration statement, or file
a new registration statement, or both, so as to cover all shares of Registrable
Securities requesting registration under Section 2(a). The Company shall effect
such amendment or new registration as soon as possible, but in no event later
than ninety days of the date the registration statement filed under Section 2 is
insufficient to cover all the shares of Registrable Securities then outstanding
and demanding registration.
6. OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) The Company shall file with the Securities and Exchange
Commission a complete registration statement and any necessary amendments
thereof.
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(b) With respect to any Demand Registration, use best efforts to
keep such registration statement effective for a period of at least 180 days and
in any event until the distribution contemplated by that registration statement
has been completed.
(c) Furnish to Holder or Holders, at least three days prior to
filing, copies of the registration statement's drafts, and allow the Holder or
Holder and its/their counsel reasonable ability to comment and perform due
diligence prior to the filing of that registration statement;
(d) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(e) Register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holders of the Registrable Securities
covered by such registration statement, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(g) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Act, of the happening of any event which
would make a statement in such registration statement or the prospectus included
therein to be an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(h) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, 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 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, addressed to the underwriters, if any, and to the Holder requesting
registration of Registrable Securities and (ii) a letter dated 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, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
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7. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Holder(s) shall furnish to the Company such information regarding
itself/themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities or to determine that registration
is not required pursuant to Rule 144 or other applicable provision of the Act.
8. EXPENSES OF REGISTRATION. In the event of a sale of securities
pursuant to a registration statement under this Agreement, the underwriting
discounts and commissions shall be borne proportionately by the selling
Holder(s). All other costs and expenses incurred in connection with
registrations, filings or qualifications pursuant to Section 2 and Section 3,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, and including the reasonable fees and disbursements (not to exceed
$10,000 per registration) incurred for only one counsel for the selling
Holder(s), shall be borne by the Company.
9. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each "Holder Indemnified Persons" (defined for purposes of this
Section 9 as each Holder, the officers and directors of each Holder acting in
their capacity as such, any underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Act or the Securities Exchange Act of 1934, as amended (the "1934
Act")), against any losses, claims, damages, expenses, or liabilities (joint or
several)("Losses") to which they may become subject under the Act, the 1934 Act
or other federal or state law, insofar as such Losses (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"): (i) any untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation by the Company of the Act, the 1934 Act, any
state securities law or any rule or regulation promulgated under the Act, the
1934 Act or any state securities law; and the Company will reimburse each such
Holder Indemnified Person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Loss or action;
provided, however, that the indemnity agreement contained in this subsection
9(a) shall not apply to amounts paid in settlement of any such Loss or action if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such Loss or action to the extent that it arises out of or is based
upon a Violation which occurs (i) in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder Indemnified Person, or a Holder Indemnified
Person's failure to provide such information as is necessary to make the
registration statement not misleading, or (ii) the failure of such Holder
Indemnified Person to deliver a copy of the registration statement or the
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prospectus, or any amendments or supplements thereto, after the Company or
underwriters has furnished such person with a sufficient number of copies of the
same.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the "Company Indemnified Persons" (defined for the
purpose of this Section 9 as the Company, each of its directors in their
capacity as such, each of its officers who have signed the registration
statement in their capacity as such, each person, if any, who controls the
Company within the meaning of the Act in their capacity as such, any underwriter
and any other Holder Indemnified Person selling securities in such registration
statement), against any Loss (joint or several) to which the Company or any such
director, officer, controlling person, or underwriter or controlling person, or
other such Holder Indemnified Person may become subject, under the Act, the 1934
Act or other federal or state law, insofar as such Loss (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company and any such
Company Indemnified Person in connection with investigating or defending any
such Loss or action; provided, however, that the indemnity agreement contained
in this subsection 9(b) shall not apply to amounts paid in settlement of any
such Loss or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this subsection 9(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 9, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 9.
(d) The obligations of the Company and Holders under this Section 9
shall survive the exercise, if any, of the Conversion Rights, the completion of
any offering of Registrable Securities in a registration statement under this
Agreement, and otherwise.
10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule
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or regulation of the SEC that may at any time permit a Holder to sell securities
of the Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of SEC
Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), (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 in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities without
registration.
11. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder, each future
Holder, and the Company.
12. NOTICES. All notices required or permitted under this Agreement
shall be made in writing signed by the party making the same, shall specify the
section under this Agreement pursuant to which it is given, and shall be
addressed if to: (i) the Company at 000 Xxxxx Xxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxxxx 00000 Attn: Xxxx X. Xxxxxxxxx, and (ii) the Holder(s) at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attn: Xxxxxx Xxxxxxxxx or at such other
last address as the Holder(s) shall have furnished in writing to the Company.
Any notice, except as otherwise provided in this Agreement, shall be made by
overnight messenger delivery and shall be deemed given as of the first business
day after the date delivered to the messenger.
13. TERMINATION. This Agreement shall terminate on the fifth
anniversary date hereof, November 15, 2006, but without prejudice to (a) the
parties' rights and obligations accruing under, or arising from breaches of,
this Agreement prior to such termination or (b) other indemnification
obligations under this Agreement.
14. ASSIGNMENT. No assignment, transfer or delegation, whether by
operation of law or otherwise, of any rights or obligations under this Agreement
by any Holder, shall be made without the prior written consent of the Company;
provided, however, that the rights of a Holder may be transferred without such
consent to a subsequent holder of the Holder's
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Registrable Securities provided such transferee shall provide to the Company,
together with or prior to such transferee's request to have such Registrable
Securities included in a Demand Registration or Piggyback Registration, a
writing executed by such transferee agreeing to be bound as a Holder by the
terms of this Agreement; and provided further that the Company may transfer its
rights and obligations under this Agreement to a purchaser of all or a
substantial portion of its business if the obligations of the Company under this
Agreement are assumed in connection with such transfer, either by merger or
other operation of law (which may include without limitation a transaction
whereby the Registrable Securities are converted into securities of the
successor in interest) or by specific assumption executed by the transferee.
15. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania, applicable to
agreements made in and wholly to be performed in that jurisdiction without
giving effect to conflicts of laws provisions, except for matters arising under
the Act or the Securities Exchange Act of 1934, which matters shall be construed
and interpreted in accordance with such laws. Any action brought to enforce, or
otherwise arising out of, this Agreement shall be heard and determined only in
either a federal or state court sitting in the Eastern District of Pennsylvania.
16. DEFINED TERMS. Capitalized terms not defined herein shall have
the meaning ascribed thereto in the Stock Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
SUMITOMO CORPORATION OF AMERICA
By: /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx, Senior Vice President
DALECO RESOURCES CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx, President
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