Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
dated as of
November 3, 1997
between
COMPOST AMERICA HOLDING COMPANY, INC.
and
WASTECO VENTURES LIMITED
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS.........................................................1
1.1 Definitions..........................................................1
ARTICLE 2 REGISTRATION RIGHTS.................................................4
2.1 Securities Subject to this Agreement.................................4
2.2 Demand Registration..................................................4
2.3 Piggyback Registration...............................................6
2.4 Registration Procedures..............................................8
2.5 Preparation: Reasonable Investigation...............................11
2.6 Certain Rights of Holders...........................................12
2.7 Registration Expenses...............................................12
2.8 Indemnification; Contribution.......................................12
2.9 Participation in Underwritten Registrations.........................15
2.10 Selection of Underwriters...........................................15
ARTICLE 3 RULE 144...........................................................15
3.1 Rule 144 Reporting..................................................15
ARTICLE 4 MISCELLANEOUS......................................................16
4.1 Entire Agreement....................................................16
4.2 Successors and Assigns..............................................16
4.3 Notices.............................................................16
4.4 Headings............................................................17
4.5 Counterparts........................................................17
4.6 Applicable Law......................................................17
4.7 Specific Enforcement................................................18
4.8 Amendment and Waivers...............................................18
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 3, 1997 (the
"Agreement"), between COMPOST AMERICA HOLDING COMPANY, INC., a New Jersey
corporation (the "Company"), and WASTECO VENTURES LIMITED, a corporation
organized under the laws of the British Virgin Islands (the "Holder").
RECITALS
WHEREAS, the Company has agreed to sell to the Holder, and the Holder has
agreed to purchase from the Company, shares of Series A Preferred Stock (as
defined herein); Series C Preferred Stock (as defined herein) and shares of
Common Stock (as defined herein) of the Company, upon the terms and subject
to the conditions set forth in that certain Stock Purchase Agreement, dated
as of the date hereof (the "Stock Purchase Agreement"), by and between the
Company and Wasteco Ventures Limited;
WHEREAS, it is a condition precedent to the obligations of the Holder
under the Stock Purchase Agreement that the Company grant certain
registration rights in respect of the Restricted Securities (as defined
herein); and
WHEREAS, the Company and the Holder desire to evidence such registration
rights by entering into this Agreement.
AGREEMENT
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which banks in New York are authorized by law to close.
"Closing Date" means the date on which the completion of the transactions
specified in the Stock Purchase Agreement relating to the purchase and sale
of Series A Preferred Stock and Series C Preferred Stock as contemplated by
Section 2.01 thereof shall occur.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, no par value, of the Company.
"Company Registration Statement" means the Registration Statement of the
Company
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relating to the registration for sale of shares of the Company's Common Stock
contemplated by Section 2.3, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
"Effective Time" means the date of effectiveness of any Registration
Statement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Series A Preferred Stock" means the Series A Preferred Stock, no par
value, of the Company.
"Series C Preferred Stock" means the Series C Preferred Stock, no par
value, of the Company.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
The term "register" means to register under the Securities Act and
applicable state securities laws for the purpose of effecting a public sale
of securities.
"Registration Statement" means the Company Registration Statement and/or
the Shelf Registration Statement.
"Restricted Securities" means any Securities until (i) a registration
statement covering such Securities has been declared effective by the
Commission and such Securities have been disposed of pursuant to such
effective registration statement, (ii) such Securities are sold under
circumstances in which all the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, or such
Securities may be sold pursuant to Rule 144(k) (or any similar provision then
in force) under the Securities Act, and are freely tradable after such sale
by the transferee, (iii) such Securities are otherwise transferred, the
Company has delivered a new certificate or other evidence of ownership for
such Securities not bearing a legend restricting further transfer and such
Securities may be resold without registration under the Securities Act, or
(iv) such Securities shall have ceased to be outstanding.
"Securities" means the shares of Common Stock issuable by the Company to
the Holder at the Closing Date and upon conversion of the Series C Preferred
Stock.
"Securities Act" means the Securities Act of 1933, as amended.
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"Shelf Registration Statement" means the Registration Statement of the
Company relating to the shelf registration for resale of Restricted
Securities contemplated by Section 2.2 herein, including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Stock Purchase Agreement" has the meaning given to it in the recitals to
this Agreement.
As used in this Agreement, words in the singular include the plural, and
in the plural include the singular.
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ARTICLE 2
REGISTRATION RIGHTS
2.1 Securities Subject to this Agreement.
(a) The Securities entitled to the benefits of this Agreement are the
Restricted Securities, but only for so long as they remain Restricted
Securities.
(b) A Person is deemed to be a holder of Restricted Securities (each, a
"Holder") whenever such Person is the registered holder of such Restricted
Securities on the books and records of the Company or its transfer agent.
2.2 Demand Registration.
(a) Subject to the limitations set forth in this Agreement, at any time
after the date which is 90 days after the Closing Date, the Holder may
request the Company to register under the Securities Act, all or any portion
(but not less than $2.0 million of the Holder's Restricted Securities) of its
Restricted Securities for sale on terms and conditions comparable to those
normally applicable to offerings of equity securities in similar
circumstances as determined by the Company on Form S-3 or such other form as
the Company deems appropriate; provided, however, that the request for
registration must be for a Shelf Registration Statement pursuant to Rule 415
under the Securities Act. The Company shall be obligated to register
Restricted Securities pursuant to this Section 2.2(a) on two occasions only,
provided, however, that such registrations shall be counted only if (A) the
corresponding Registration Statements have become effective under the
Securities Act, and (B) the public offerings have been consummated on the
terms and conditions specified therein or if not consummated, such failure
was not attributable to an action taken by the Company. The Company shall be
entitled to include in any Shelf Registration Statement filed pursuant to
this Section 2.2(a) securities of the Company held by any other shareholder
of the Company and, in an underwritten public offering, Common Stock of the
Company to be sold by the Company for its own account so long as the
inclusion of such additional securities will not result in a decrease of the
amount of Restricted Securities to be registered pursuant to this Section
2.2(a).
(b) In connection with the Shelf Registration Statement, the Company
shall comply with all the provisions of Section 2.4 below and shall use its
reasonable efforts to effect such registration to permit the sale of the
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 2.2(c)). Subject to Section 2.2(d), the
Company shall use its best efforts to keep each such Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Section 2.2(d) to the extent necessary to ensure that it is
available for resales of Restricted Securities by the Holder, and to ensure
that it conforms with the requirements of this Agreement, the Securities Act
and the policies, rules and regulations of the Commission as announced from
time to time, for a period of 18 months from the Effective Time or such
longer period as required by Section 2.2(d) or such shorter period that will
terminate when all the securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf
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Registration Statement or otherwise cease to be Restricted Securities (the
"Effective Period"). Upon the occurrence of any event that would cause any
Shelf Registration Statement or the Prospectus contained therein (i) to
contain a material misstatement or omission or (ii) not to be effective and
usable for sale or resale of Restricted Securities during the period required
by this Agreement, the Company shall file promptly an appropriate amendment
to such Shelf Registration Statement or the related Prospectus or any
document incorporated therein by reference, in the case of clause (i),
correcting any such misstatement or omission, and, in the case of either
clause (i) or (ii), use its reasonable efforts to cause such amendment to be
declared effective and such Registration Statement and the related Prospectus
to become usable for its intended purpose(s) as soon as practicable
thereafter.
(c) The Holder may not include any of its Restricted Securities in a
Shelf Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing, within 30 Business Days after
receipt of a written request therefor, such information specified in Item 507
of Regulation S-K under the Securities Act and such other information as the
Company may reasonably request for use in connection with a Shelf
Registration Statement or Prospectus or preliminary Prospectus included
therein and in any application to the NASD. The Holder agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
(d) Notwithstanding anything to the contrary contained herein, if (x)
the Board determines in good faith that the registration and distribution of
Restricted Securities (or the use of any such Shelf Registration Statement or
the Prospectus contained therein) would interfere with any proposed or
pending material corporate transaction involving the Company or any of its
subsidiaries or would require premature disclosure thereof or would require
the Company to disclose information that the Company has not otherwise made
public and that the Company reasonably determines is in the best interests of
the Company not to disclose at such time, and (y) the Company notifies the
Holder in writing not later than three days following such determination
(such notice a "Blackout Notice"), the Company may (A) postpone the filing of
such Shelf Registration Statement or (B) allow such Shelf Registration
Statement to fail to be effective and usable or elect that such Shelf
Registration Statement not be usable for a reasonable period of time, but not
in excess of 30 days (a "Blackout Period"); provided, however, that the
aggregate number of days included in all Blackout Periods shall not exceed 90
during any consecutive 12 months and shall not exceed 150 during the period
specified in Section 2.2(b) of this Agreement; and provided, further, that
the Effective Period referred to in Section 2.2(b) during which a Shelf
Registration Statement is required to be effective and usable shall be
extended by the aggregate number of days during which such Shelf Registration
Statement was not effective or usable pursuant to the foregoing provisions.
(e) Notwithstanding anything to the contrary contained herein, the
Company shall not be obligated to file a Shelf Registration Statement in
respect of Restricted Securities pursuant to this Section 2.2 if: (i) the
Company has previously filed a Shelf Registration Statement with respect to
Restricted Securities, and a period of at least 180 days has not elapsed from
the date on which the Effective Period of such Shelf Registration Statement
has expired; and (ii) the Company has
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previously filed a Company Registration Statement pursuant to which
Restricted Securities have been registered under Section 2.3 hereof, and a
period of at least 120 days has not elapsed from the Effective Time of such
Company Registration Statement.
2.3 Piggyback Registration.
(a) At any time that the Company proposes to file a Company Registration
Statement, either for its own account or for the account of a stockholder or
stockholders, the Company shall give the Holder written notice of its
intention to do so and of the intended method of sale (the "Registration
Notice") within a reasonable time prior to the anticipated filing date of the
Company Registration Statement effecting such registration (but in no event
less than 30 days before the anticipated filing date). The Holder may request
inclusion of any Restricted Securities in such Company Registration Statement
by delivering to the Company, within 30 Business Days after receipt of the
Registration Notice, a written notice (the "Piggyback Notice") stating the
number of Restricted Securities proposed to be included and that such shares
are to be included in any underwriting only on the same terms and conditions
as the shares of Common Stock otherwise being sold through underwriters under
such Company Registration Statement. The Company shall use its best efforts
to cause all Restricted Securities specified in the Piggyback Notice to be
included in the Company Registration Statement and any related offering, all
to the extent requisite to permit the sale by the Holder of such Restricted
Securities in accordance with the method of sale applicable to the other
shares of Common Stock included in such Company Registration Statement;
provided, however, that if, at any time after giving Registration Notice and
prior to the Effective Time of the Company Registration Statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may,
at its election, give written notice of such determination to the Holder and,
thereupon:
(i) in the case of a determination not to register, shall be relieved
of its obligation to register any Restricted Securities in connection with
such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), and
(ii) in the case of a delay in registering, shall be permitted to
delay registering any Restricted Securities for the same period as the
delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a
Company Registration Statement pursuant to Section 2.3(a) shall be subject to
the following limitations:
(i) The Company shall not be obligated to include any Restricted
Securities in a registration statement filed on Form X-0, Xxxx X-0 or such
other similar successor forms then in effect under the Securities Act.
(ii) If a Company Registration Statement involves an underwritten
offering and the managing underwriter advises the Company in writing that,
in its opinion, the number of securities requested to be included in such
Registration Statement exceeds the number
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which can be sold in such offering without adversely affecting the
offering, the Company will include in such Registration Statement the
number of such Securities which the Company is so advised can be sold in
such offering without adversely affecting the offering, determined as
follows:
(A) first, the securities proposed by the Company to be sold for
it own account, and
(B) second, any Restricted Securities requested to be included
in such registration and any other securities of the Company pro rata
among the holders thereof requesting such registration on the basis of
the number of shares of such securities requested to be included by
such holders.
(iii) The Company shall not be obligated to effect any
registration for the account of the Holder on a Company Registration
Statement with respect to less than $2.0 million of the Holder's Restricted
Securities, subject to the provisions of Subsection (ii) of this Section
2.3(b).
(iv) The Company shall not be obligated to effect any registration for
the account of the Holder on a Company Registration Statement if, prior to
the filing date of such Company Registration Statement, (A) the Holder has
requested registration of its Restricted Securities on a Shelf Registration
Statement pursuant to Section 2.2 hereof, (B) the corresponding Shelf
Registration Statement has become effective under the Securities Act, and
(C) the public offering has been consummated on the terms and conditions
specified therein or if not consummated, such failure was not attributable
to an action taken by the Company.
(c) The Holder may not include any of its Restricted Securities in a
Company Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 30 Business Days
after receipt of a written request therefor, such information specified in
Item 507 of Regulation S-K under the Securities Act and such other
information as the Company may reasonably request for use in connection with
the Registration Statement or Prospectus or preliminary Prospectus included
therein and in any application to the NASD. The Holder agrees to furnish
promptly to the Company all information required to be disclosed in order to
make all information previously furnished to the Company by such Holder not
materially misleading.
(d) The Company represents and confirms that, except as provided in that
certain Registration Rights Agreement dated as of November 3, 1997 between
the Company and Xxxxxx X. Xxxxx (the "Xxxxx Registration Rights Agreement"),
it has granted no piggyback registration rights to any holder of Common Stock
prior to the date hereof. The Company covenants not to grant any such
piggyback registration rights which would permit any holder of Common Stock
to have piggyback registration rights prior to, or, except for the Xxxxx
Registration Rights Agreement, on a parity with, those of the Holder.
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2.4 Registration Procedures. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Restricted Securities, the Company shall:
(a) prepare and file with the Commission such amendments and
post-effective amendments to such Registration Statement as may be necessary
to keep such Registration Statement effective (i) if such Registration
Statement is a Company Registration Statement, until the earlier of such time
as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such Company Registration Statement or (ii) if such Registration Statement is
a Shelf Registration Statement, for the applicable period set forth in
Section 2.2(b) herein; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act, and to comply fully with the applicable
provisions of Rules 424 and 430A, as applicable, under the Securities Act in
a timely manner; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method
or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement or the Prospectus;
(b) promptly (and in respect of events covered by clause (i) hereof, on
the same day as the Company shall receive notice of effectiveness) advise the
Holder and, if requested by such Persons, to confirm such advice in writing,
(i) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and when the same has become effective, (ii) of any
request by the Commission for post-effective amendments to such Registration
Statement or post-effective amendments to such Registration Statement or
post-effective amendments or supplements to the Prospectus or for additional
information relating thereto, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of any such Registration Statement
under the Securities Act or of the suspension by any state securities
commission of the qualification of the Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, and (iv) of the existence of any fact or the happening of
any event that makes any statement of a material fact made in any such
Registration Statement, the related Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in any such Registration
Statement or the related Prospectus in order to make the statements therein
not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of such Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Restricted Securities under state securities or Blue Sky laws, the Company
shall use its reasonable efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(c) promptly furnish to the Holder, and each underwriter, if any,
without charge, at least one conformed copy of any Registration Statement, as
first filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference) and such other documents as such
Holder may reasonably request;
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(d) deliver to the Holder, and each underwriter, if any, without charge,
as many copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such person reasonably may request.
(e) enter into such customary agreements and take all such other
reasonable action in connection therewith (including those reasonably
requested by the Holder or the underwriter(s), if any) required in order to
expedite or facilitate the disposition of such Restricted Securities pursuant
to such Registration Statement, including, but not limited to, dispositions
pursuant to an underwritten registration, and in such connection:
(i) make such representations and warranties to the Holder and
underwriter(s), if any, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings (whether or not
sales of securities pursuant to such Registration Statement are to be to an
underwriter(s)) and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company addressed to the Holder
and underwriter(s), if any, covering the matters customarily covered in
opinions requested in underwritten offerings (whether or not sales of
securities pursuant to such Registration Statement are to be made to an
underwriter(s)) and dated the Effective Time of any Registration Statement
(and, in the case of any underwritten sale of securities pursuant to such
Registration Statement, each closing date of sales to the underwriter(s)
pursuant thereto);
(iii) use reasonable efforts to obtain comfort letters dated the
Effective Time of any Registration Statement (and, in the case of any
underwritten sale of securities pursuant to such Registration Statement,
each closing date of sales to the underwriter(s) pursuant thereto) from the
independent certified public accountants of the Company addressed to the
Holder and underwriter, if any, such letters to be in customary form and
covering matters of the type customarily covered in comfort letters in
connection with underwritten offerings (whether or not sales of securities
pursuant to such Registration Statement are to be made to an
underwriter(s));
(iv) provide for the indemnification provisions and procedures of
Section 2.6 hereof with respect to the Holder and the underwriter(s), if
any, and;
(v) deliver such documents and certificates as may be reasonably
requested by the Holder or the underwriter(s), if any, and which are
customarily delivered in underwritten offerings (whether or not sales of
securities pursuant to such Registration Statement are to be made to an
underwriter(s), with such documents and certificates to be dated the
Effective Time of any Registration Statement.
The actions required by clauses (i) through (v) above shall be done at
each closing under such underwriting or similar agreement, as and to the
extent required thereunder, and if at any time the representations and
warranties of the Company contemplated in clause (i) above cease to be true
and correct, the Company shall so advise the underwriter(s), if any, and the
Holder promptly, and, if
9
requested by such Person, shall confirm such advice in writing;
(f) prior to any public offering of Restricted Securities, cooperate
with the Holder, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Restricted
Securities under the securities or Blue Sky laws of such U.S. jurisdictions
as the Holder or underwriter(s), if any, may reasonably request in writing by
the time any Registration Statement is declared effective by the Commission,
and do any and all other acts or filings necessary or advisable to enable
disposition in such U.S. jurisdictions of the Restricted Securities covered
by any Registration Statement and to file such consents to service of process
or other documents as may be necessary in order to effect such registration
or qualification; provided, however, that the Company shall not be required
to register or qualify as a foreign corporation in any jurisdiction where it
is not then so qualified or as a dealer in securities in any jurisdiction
where it would not otherwise be required to register or qualify but for this
Section 2.4, or to take any action that would subject it to the service of
process in suits or to taxation, in any jurisdiction where it is not then so
subject;
(g) in connection with any sale of Restricted Securities that will
result in such securities no longer being Restricted Securities, cooperate
with the Holder and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Restricted Securities
to be sold and not bearing any restrictive legends; and enable such
Restricted Securities to be in such denominations and registered in such
names as the Holder or the underwriter(s), if any, may request at least two
(2) Business Days prior to any sale of Restricted Securities made by such
underwriters;
(h) use its reasonable efforts to cause the disposition of the
Restricted Securities covered by any Registration Statement to be registered
with or approved by such other U.S. governmental agencies or authorities as
may be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Restricted
Securities, subject to the proviso contained in Section 2.4(f);
(i) if any fact or event contemplated by Section 2.4(b) shall exist or
have occurred, prepare a supplement or post-effective amendment to any
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statement therein not
misleading;
(j) cooperate and assist in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules
and regulations of the NASD, and use its reasonable efforts to cause any
Registration Statement to become effective and approved by such U.S.
governmental agencies or authorities as may be necessary to enable the Holder
to consummate the disposition of such Restricted Securities;
(k) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to
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such Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
for the twelve-month period (i) commencing at the end of any fiscal quarter
in which Restricted Securities are sold to the underwriter in a firm or best
efforts underwritten offering or (ii) if not sold to an underwriter in such
an offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of any Registration Statement;
(l) provide a CUSIP number for all Restricted Securities not later than
the Effective Time of any Registration Statement;
(m) use its best efforts to qualify for inclusion, not later than the
Effective Time of such Registration Statement, all Restricted Securities
covered by such Registration Statement on the OTC Bulletin Board of the NASD,
or any other trading market on which the Common Stock of the Company is then
admitted for trading, and
(n) provide promptly to Holder upon request each document filed with the
Commission pursuant to the requirements of Section 12 and Section 14 of the
Exchange Act.
The Holder agrees by acquisition of a Restricted Security that, upon
receipt of any notice from the Company of the existence of any fact of the
kind described in Section 2.4(b)(iv) or the commencement of a Blackout
Period, such Holder will forthwith discontinue disposition of Restricted
Securities pursuant to any Registration Statement until such Holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by
Section 2.4(i), or until it is advised in writing, in accordance with the
notice provisions of Section 4.3 herein (the "Advice"), by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by the Company, the Holder will deliver to the
Company all copies, other than permanent file copies, then in such Holder's
possession, of the Prospectus covering such Restricted Securities that was
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time period regarding the effectiveness of the
Shelf Registration Statement set forth in Section 2.2(b) shall be extended by
the number of days during the period from and including the date of the
giving of such notice pursuant to Section 2.4(b)(iv) or the commencement of a
Blackout Period to and including the date when the Holder shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
2.4(i) or shall have received (in accordance with the notice provisions of
Section 4.3) the Advice.
2.5 Preparation; Reasonable Investigation. In connection with preparation
and filing of each Registration Statement under the Securities Act, the
Company will give the Holder, its underwriter, if any, and their respective
counsel and accountants, the opportunity to participate in the preparation of
such Registration Statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto, and will
give each to them access to its books and records and such opportunities to
discuss the business, finances and accounts of the Company and its
subsidiaries with its officers, directors and the independent public
accountants who have certified its financial statements as shall be
necessary, in the reasonable opinion of the Holder and such underwriters '
respective counsel, to conduct a reasonable investigation within the meaning of
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the Securities Act.
2.6 Certain Rights of the Holder. The Company will not file any registration
statement under the Securities Act which refers to the Holder by name or
otherwise without the prior approval of such Holder, which consent shall not
be unreasonably withheld or delayed.
2.7 Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i)
all registration and filing fees and expenses (including filings made with
the NASD and reasonable counsel fees in connection therewith); (ii) all
reasonable fees and expenses of compliance with federal securities and state
Blue Sky or securities laws (including all reasonable fees and expenses of
one counsel to the underwriter(s) in any underwriting) in connection with
compliance with state Blue Sky or securities laws for up to 10 states; (iii)
all expenses of printing, messenger and delivery services and telephone
calls; (iv) all fees and disbursements of counsel for the Company; and (v)
all fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance), but excluding from this
paragraph, fees and expenses of counsel to the underwriter(s), if any, unless
otherwise set forth herein.
(b) Notwithstanding the foregoing, the Company will not be responsible
for any underwriting discounts, commissions or fees attributable to the sale
of Restricted Securities or any legal fees or disbursements (other than any
such fees or disbursements relating to Blue Sky compliance or otherwise as
set for the under Section 2.7(a)) incurred by any underwriter(s) in any
underwritten offering if the underwriter(s) participates in such underwritten
offering at the request of the Holder, or any transfer taxes that may be
imposed in connection with a sale or transfer of Restricted Securities.
(c) The Company shall, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
2.8 Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless (i) the Holder,
(ii) each other Person who participates as an underwriter in the offering or
sale of such securities, (iii) each person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) the Holder or underwriter (any of the persons referred to in this clause
(iii) being hereinafter referred to as a "controlling person") and (iv) the
respective officers, directors, partners, employees, representatives and
agents of the Holder or underwriter or any controlling person (any person
referred to in clause (i), (ii), (iii) or (iv) may hereinafter be referred to
as an "indemnified Person"), to the fullest extent lawful, from and against
any and all losses, claims, damages,
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liabilities, judgments or expenses, joint or several (or actions or
proceedings, whether commenced or threatened, in respect thereof)
(collectively, "Claims"), to which such indemnified Person may become subject
under either Section 15 of the Securities Act or Section 20 of the Exchange
Act or otherwise, insofar as such Claims arise out of or are based upon, or
are caused by any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus (or any amendment
or supplement thereto), or 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 a violation by the Company of the
Securities Act or any state securities law, or any rule or regulation
promulgated under the Securities Act or any state securities law, or any
other law applicable to the Company relating to any such registration or
qualification, except insofar as such losses, claims, damages, liabilities,
judgments or expenses of any such indemnified Person; (x) are caused by any
such untrue statement or omission or alleged untrue statement or omission
that is based upon information relating to such indemnified Person furnished
in writing to the Company by or on behalf of any of such indemnified Person
expressly for use therein; (y) with respect to the preliminary Prospectus,
result from the fact that the Holder sold Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Prospectus, as amended or supplemented, if the Company
shall have previously furnished copies thereof to the Holder in accordance
with this Agreement and said Prospectus, as amended or supplemented, would
have corrected such untrue statement or omission; or (z) as a result of the
use by an indemnified Person of any Prospectus when, upon receipt of a
Blackout Notice or a notice from the Company of the existence of any fact of
the kind described in Section 2.4(b)(iv), the indemnified Person or the
Holder was not permitted to do so. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any
indemnified Person and shall survive the transfer of such securities by such
Holder.
In case any action shall be brought or asserted against any of the
indemnified Persons with respect to which indemnity may be sought against the
Company, such indemnified Person shall promptly notify the Company and the
Company shall assume the defense thereof. Such indemnified Person shall have
the right to employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the indemnified Person unless (i) the employment of such
counsel shall have been specifically authorized in writing by the Company,
(ii) the Company shall have failed to assume the defense and employ counsel
or (iii) the named parties to any such action (including any implied parties)
include both the indemnified Person and the Company and the indemnified
Person shall have been advised in writing by its counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to assume the defense of such action on behalf of the
indemnified Person), it being understood, however, that the Company shall
not, in connection with such action or similar or related actions or
proceedings arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all the
indemnified Persons, which firm shall be (x) designated by such indemnified
Persons and (y) reasonably satisfactory to the Company. The Company shall not
be liable for any settlement of any such action or proceeding effected
without the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company agrees to indemnify and hold harmless
any indemnified Person from and against any loss, claim, damage,
13
liability, judgment or expense by reason of any settlement of any action
effected with the written consent of the Company. The Company shall not,
without the prior written consent of each indemnified Person, settle or
compromise or consent to the entry of judgment on or otherwise seek to
terminate any pending or threatened action, claim, litigation or proceeding
in respect of which indemnification or contribution may be sought hereunder
(whether or not any indemnified Person is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional
release of each indemnified Person from all liability arising out of such
action, claim litigation or proceeding.
(b) The Holder agrees to indemnify and hold harmless the Company and its
directors, officers and any person controlling (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) the Company, and
the respective officers, directors, partners, employees, representatives and
agents of each person, to the same extent as the foregoing indemnity from the
Company to each of the indemnified Persons, but only (i) with respect to
actions based on information relating to the Holder furnished in writing by
or on behalf of such Holder expressly for use in any Registration Statement
or Prospectus, and (ii) to the extent of the gross proceeds, if any, received
by such Holder from the sale or other disposition of its Restricted
Securities covered by such Registration Statement. In case any action or
proceeding shall be brought against the Company or its directors or officers
or any such controlling person in respect of which indemnity may be sought
against the Holder, such Holder shall have the rights and duties given the
Company in Section 2.8(a) (except that the Holder may but shall not be
required to assume the defense thereof), and the Company or its directors or
officers or such controlling person shall have the rights and duties given to
the Holder by Section 2.8(a).
(c) If the indemnification provided for in this Section 2.8 is
unavailable to an indemnified party under Section 2.7(a) or (b) (other than
by reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities, judgments or expenses referred to therein, then
each applicable 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, claims damages, liabilities, judgments or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Holder on the other
hand from sale of Restricted Securities or (ii) if such allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the Holder in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities, judgments or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company on the
one hand and of the Holder on the other 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 by the Holder and the
parties relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid to a party as
a result of the losses, claims, damages, liabilities judgments and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 2.8(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating
or defending any action or claim.
14
The Company and the Holder agree that it would not be just and equitable
if contribution pursuant to this Section 2.8(c) were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 2.8(c) the Holder
(and its related indemnified Persons) shall not be required to contribute, in
the aggregate, any amount in excess of the amount by which the dollar amount
of proceeds received by such Holder upon the sale of the Restricted
Securities exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentations (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The indemnity, and contribution provisions contained in this Section 2.8
are in addition to any liability which the indemnifying person may otherwise
have to the indemnified persons referred to above.
2.9 Participation in Underwritten Registrations. The Holder may not
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Restricted Securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.
2.10 Selection of Underwriters. The Holder may sell its Restricted Securities in
an underwritten offering. In any such underwritten offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the Holder if such registration is pursuant to the
Shelf Registration Statement, and by the Company if such registration is
pursuant to a Company Registration Statement; provided, however, that such
investment bankers and managers must be reasonably satisfactory to the Company
or the Holder, respectively. Such investment bankers and managers are referred
to herein as the "underwriters".
ARTICLE 3
RULE 144
3.1 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of
restricted securities (as that term is used in Rule 144 under the Securities
Act) to the public without registration, the Company agrees to use its best
efforts to:
(a) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
(b) file with the Commission in a timely manner all reports and other
15
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) so long as the Holder owns any Restricted Securities, furnish to the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 and of the Securities
Act and Exchange Act, a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents so filed as the Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holder to sell any such Restricted Securities without
registration.
ARTICLE 4
MISCELLANEOUS
4.1 Entire Agreement. This Agreement, together with the Stock Purchase
Agreement, constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior agreement and
understandings, both oral and written, between the parties with respect to
the subject matter hereof.
4.2 Successors and Assigns. Wasteco Ventures Limited expects to assign all
rights under this Agreement to a limited partnership or other entity in which
it will have a substantial interest (the "Proposed Assignee"). An assignment
prior to February 1, 1998 shall be effective without any consent by the
Company upon written notice thereof accompanied by a statement of Wasteco
Ventures Limited that it has a substantial interest in the Proposed Assignee
and a statement by the Proposed Assignee addressed to the Company that it
agrees to be bound by the terms of this Agreement. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of
each of the parties, including without limitation and without the need for an
express assignment, subsequent holders of Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of the Holder unless and to the extent such
successor or assign acquired Restricted Securities from the Holder at a time
when the Holder could not transfer such Restricted Securities pursuant to any
Registration Statement or pursuant to Rule 144 under the Securities Act as
contemplated by clause (ii) of the definition of Restricted Securities.
4.3. Notices. All notices and other communications given or made pursuant
hereto or pursuant to any other agreement among the parties, unless otherwise
specified, shall be in writing and shall be deemed to have been duly given or
made if sent by telecopy (with confirmation in writing), delivered personally
or by overnight courier or sent by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the telecopy number, if
any, or address set forth below or at such other addresses as shall be
furnished by the parties by like notice. Notices sent by telecopier shall be
effective when receipt is acknowledged, notices delivered personally or by
overnight courier shall be effective upon receipt and notices sent by
registered or certified mail shall be effective three days after mailing:
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if to the Holder: Wasteco Ventures Limited
Citco Building, Xxxxxxx Xxx
X.X. Xxx 000
Xxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx
with copies to: Wafra Investment Advisory Group, Inc.
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx X. Xxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
-and-
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx Field, Esq.
Fax: (000) 000-0000
Telephone: (000) 000-0000
if to the Company: Compost America Holding Company, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
with copies to: Xxxxxxxxx Traurig Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
Telephone: (000) 000-0000
4.4 Headings The headings contained in this Agreement are for convenience
only and shall not affect the meaning or interpretation of this Agreement.
4.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
4.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with
17
the laws of the state of New York, without giving effect to choice law
provisions.
4.7 Specific Enforcement. Each party hereto acknowledges that the remedies
at law of the other parties for a breach or threatened breach of this
Agreement would be inadequate, and, in recognition of this fact, any party to
this Agreement, without posting any bond, and in addition to all other
remedies which may be available, shall be entitled to obtain equitable relief
in the form of specific performance, a temporary restraining order, a
temporary to permanent injunction or any other equitable remedy which may
then be available.
4.8 Amendment and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained
the unanimous written consent of the Holders of the Restricted Securities.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
COMPOST AMERICA HOLDIING COMPANY, INC.
By:____________________________________
Name:
Title
WASTECO VENTURES LIMITED
By:___________________________
Name:
Title:
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