REGISTRATION RIGHTS AGREEMENT
Exhibit
4.1
This
Registration Rights Agreement (“Agreement”)
is made as of November ___, 2009, by and among Pure Earth, Inc., a Delaware corporation
(the “Company”),
and the subscribers for the Company’s Series C Convertible Preferred Stock, par
value $.001 per share (the “Series C
Shares”). Each of such subscribers is referred to in this
Agreement, individually, as a “Shareholder”
and, collectively, such subscribers are referred to as the “Shareholders”.
Background
A. The
Company is issuing Series C Shares to each Shareholder on the date of this
Agreement.
B. By
subscribing for Series C Shares and executing the Subscription Agreement, dated
the date of this Agreement, relating to the Series C Shares, each Shareholder
has agreed to become bound by, subject to, and party to, this Agreement without
separately executing it.
NOW,
THEREFORE, intending to be legally bound, the parties hereby agree as
follows:
1. Definitions. For purposes of this
Agreement:
1.1 “Affiliate” means, with respect
to any specified Person, any other Person who, directly or indirectly, controls,
is controlled by, or is under common control with such Person, including without
limitation, any general partner, managing
member, officer or director of such Person.
1.2 “Common Stock” means shares of
the Company’s common stock, par value $.001 per share.
1.3 “Damages” means any loss,
damage, or liability (joint or several) to which a party hereto may become
subject under the Securities Act, the Exchange Act, or other federal or state
law, insofar as such loss, damage, or liability (or any action in respect
thereof) arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement of
the Company described herein, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto;
(ii) an omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein, with
respect to any prospectus, in light of the circumstances under which they were
made, not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act,
the Exchange Act, any state securities law, or any rule or regulation
promulgated under the Securities Act, the Exchange Act, or any state securities
law, except to the extent that (i) such untrue statements or omissions are based
solely upon information regarding such Shareholder furnished in writing to the
Company by such Shareholder expressly for use therein, or to the extent that
such information relates to such Shareholder or such Shareholder’s proposed
method of distribution of Registrable Securities and was reviewed and approved
by the Shareholder for use in the registration statement or any prospectus
contained therein or in any amendment or supplement thereto or (ii) in the case
of receipt by such Shareholder of a Notice (as defined in Section 2.3(j)), the
use by such Shareholder of a prospectus prior to the receipt by such Shareholder
of the Advice contemplated in Section 2.3(j) (the foregoing Damages described in
clauses (i) through (iii) herein shall be collectively referred to as the “Shareholder
Indemnifiable Damages”).
1.4 “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
1.5 “Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or
a subsidiary pursuant to a stock option, stock purchase, or similar plan or
agreement; (ii) a registration relating to a transaction under Securities Act
Rule 145; (iii) a registration on any form that does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities; or (iv) a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being
registered.
1.6 “Person” means any individual, corporation, partnership, trust,
limited liability company, association or other
entity.
1.7 “Registrable Securities” means
the Common Stock issuable or issued upon conversion of the Series C Shares; provided, however, that any
such securities shall cease to be Registrable Securities at the earlier of when
(i) a registration statement with respect to such securities shall have been
declared effective or shall otherwise become effective under the Securities Act;
(ii) if a registration statement with respect to such securities has not been
declared effective or otherwise have become effective under the Securities Act,
such securities have been sold to the public pursuant to Rule 144(b) under the
Securities Act (other than pursuant to Rule 144(b)(1)(ii)) or are eligible to be
sold or transferred pursuant to Rule 144(b)(1)(ii) by a Shareholder who is not
an “affiliate” of the Company (as defined in Rule 144(a)(1)); or (iii) such
securities shall have ceased to be outstanding.
1.8 “SEC” means the Securities and
Exchange Commission.
1.9 “Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
1.10 “Selling Expenses” means all
underwriting discounts, selling commissions, and stock transfer taxes applicable
to the sale of Registrable Securities and the fees and expenses of any counsel
to the Shareholders.
2. Registration
Rights.
2.1 Company
Registration. If the Company proposes to register (including, for
this purpose, a registration effected by the Company for stockholders other than
the Shareholders) any of its securities under the Securities Act in connection
with the public offering of such securities (other than in an Excluded
Registration), then the Company shall, at such time, promptly give each
Shareholder notice of such registration. Upon the request of any
Shareholder given within twenty (20) days after such notice is given by the
Company, the Company shall, subject to the provisions of Section 2.2, use reasonable
efforts to cause to be registered all of the Registrable Securities that any
such Shareholder has requested to be included in such
registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 2.1 before the
effective date of such registration, whether or not a Shareholder has elected to
include Registrable Securities in such registration. The expenses of
any such withdrawn registration shall be borne by the Company.
2.2 Underwriting
Requirements.
(a) If
any requesting Shareholder intends to distribute
its Registrable Securities covered by its request under Section 2.1 and the
Company intends to distribute shares as part of an underwriting being undertaken
by the Company, then the right of any Shareholder to include such Shareholder’s
Registrable Securities in such registration shall be conditioned upon such
Shareholder’s participation in the underwriting, and all Shareholders proposing
to distribute their securities through such underwriting shall (together with
the Company as provided in Section 2.3(e)) enter
into an underwriting agreement in usual and customary form with the underwriter
selected for such underwriting.
(b) In
connection with any offering involving an underwriting of shares of the
Company’s capital stock, the Company shall not be required to include any of a
Shareholder’s Registrable Securities in such underwriting unless the Shareholder
accepts the terms of the underwriting as agreed upon between the Company and its
underwriters, and then only in such quantity as the underwriters in their sole
discretion determine will not jeopardize the success of the offering by the
Company, subject to the terms of this Section. If the total number of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the number of securities to be sold (other
than by the Company) that the underwriters in their reasonable discretion
determine is compatible with the success of the offering, then the Company shall
be required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters and the Company in
their sole discretion determine will not jeopardize the success of the offering,
in the following order: (i) first, the securities the Company proposes to sell;
(ii) second, the securities that each other securityholder proposes to sell by
virtue of registration rights granted by the Company prior to the date of this
Agreement, pro rata based upon the number of securities owned by each such
securityholder, on a fully-diluted common stock equivalent basis, at the time of
such registration; and (iii) third, the securities that each Shareholder and any
other person with registration rights granted by the Company proposes to sell,
pro rata based on the number of securities owned by each such securityholder on
a fully-diluted common stock equivalent basis at the time of such
registration.
2.3 Obligations of the
Company. Whenever
required under this Section 2 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such
registration statement to become effective and keep such registration statement
effective for a period of up to sixty (60) days or, if earlier, until the
distribution contemplated in the registration statement has been completed;
provided,
however, that such sixty (60) day period shall be extended for a period
of time equal to the period any Shareholder refrains, at the request of an
underwriter of Common Stock (or other securities) of the Company or upon
receiving the Notice from the Company up to but excluding the day the Advice is
received from the Company (each as defined in Section 2.3(j)), from selling any
securities included in such registration;
(b) prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the Securities Act in order to
enable the disposition of all securities covered by such registration
statement;
(c) furnish
to the selling Shareholder such numbers of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such other
documents as the Shareholder may reasonably request in order to facilitate its
disposition of its Registrable Securities;
(d) use
its commercially reasonable efforts to 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 in writing by the
selling Shareholder; provided, however, that the
Company shall not be required to (i) qualify to do business, (ii) file a general
consent to service of process, (iii) become subject to taxation, or (iv)
register as a broker or dealer in any such states or jurisdictions;
(e) in
the event it elects to proceed with an underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the underwriter(s) of
such offering;
(f) use
its commercially reasonable efforts to cause all such Registrable Securities
covered by such registration statement to be listed or quoted on the trading
system on which the Common Stock is then listed or quoted;
(g) provide
a transfer agent and registrar for all Registrable Securities registered
pursuant to this Agreement and provide a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration;
(h) promptly
make available for inspection by the selling Shareholder, any underwriter(s) participating in any disposition pursuant to
such registration statement, and any attorney or accountant or other agent
retained by any such underwriter or selected by the selling Shareholder, all
financial and other records, pertinent corporate documents, and properties of
the Company, and cause the Company’s officers, directors, employees, and
independent accountants to supply all information reasonably requested by any
such Shareholder, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the
accuracy of the information in such registration statement and to conduct
appropriate due diligence in connection therewith;
(i) notify
each selling Shareholder, promptly after the Company receives notice thereof, of
the time when such registration statement has been declared effective or a
supplement to any prospectus forming a part of such registration statement has
been filed; and
(j) notify
each selling Shareholder as promptly as reasonably possible (i) of any request
by the SEC or any other Federal or state governmental authority during the
period of effectiveness of the registration statement for amendments or
supplements to the registration statement or prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose; and (iv) of the occurrence of
any event or passage of time that makes the financial statements included in the
registration statement ineligible for inclusion therein or any statement made in
the registration statement or prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the registration statement, prospectus or other
documents so that, in the case of the registration statement or the prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and, upon receipt of a notice (the “Notice”)
from the Company of the occurrence of any event of the kind described above,
such selling Shareholder will forthwith discontinue disposition of such
Registrable Securities under the registration statement until such selling
Shareholder shall have received copies of the supplemented prospectus and/or
amended registration statement or until it is advised in writing by the Company
(the “Advice”)
that the use of the applicable prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such prospectus or
registration statement.
2.4 Furnish
Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 with respect to the
Registrable Securities of each selling Shareholder that such Shareholder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as is reasonably required to effect the registration of such Shareholder’s
Registrable Securities.
2.5 Expenses of
Registration. The Company shall pay all expenses, other than
Selling Expenses, incurred in connection with registrations, filings, or
qualifications pursuant to Section 2, including all
registration, filing, and qualification fees; printers’ and accounting fees;
fees and disbursements of counsel for the Company. All Selling
Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and
paid by the related Shareholder, except as otherwise provided
herein.
2.6 Indemnification. If
any Registrable Securities are included in a registration statement under this
Section 2:
(a) To
the extent permitted by law, the Company shall indemnify and hold harmless each
selling Shareholder, and the partners, members, officers, directors, and
stockholders of such Shareholder, and each Person, if any, who controls such
Shareholder within the meaning of the Securities Act or the Exchange Act,
against any Damages, and the Company will pay to such Shareholder, controlling
Person, or other aforementioned Person any legal or other expenses reasonably
incurred thereby in connection with defending any
claim or proceeding from which Damages may result; provided, however,
that the indemnity agreement contained in this Section 2.6(a) shall
not apply to amounts paid in settlement of any such claim or proceeding if such settlement is
effected without the consent of the Company, which consent shall not be
unreasonably withheld, nor shall the Company be liable for any Damages to the
extent that they arise out of or are based upon actions or omissions made in
reliance upon and in conformity with written information furnished by or on
behalf of any Shareholder, underwriter, controlling Person, or other
aforementioned Person expressly for use in connection with such registration or
otherwise constitute Shareholder Indemnifiable Damages.
(b) To
the extent permitted by law, each selling Shareholder shall indemnify and hold
harmless the Company, and each of its directors and officers who has signed the
registration statement, each Person (if any), who controls the Company within
the meaning of the Securities Act and the Exchange Act, and legal counsel and
accountants for the Company, against any Shareholder Indemnifiable Damages; and
such selling Shareholder shall pay to the Company and each other aforementioned
Person any legal or other expenses reasonably incurred thereby in connection
with defending any claim or proceeding from
which Shareholder Indemnifiable Damages may result; provided, however,
that the indemnity agreement contained in this Section 2.6(b) shall not
apply to amounts paid in settlement of any such claim or proceeding if such settlement is
effected without the consent of such Shareholder, which consent shall not be
unreasonably withheld; provided further, that in no
event shall the aggregate amounts payable by a selling Shareholder by way of
indemnity or contribution under Sections 2.6(b) and
2.6(d) exceed
the proceeds from the offering received by such selling Shareholder, except in
the case of fraud or willful misconduct by such Shareholder.
(c) Promptly
after receipt by an indemnified party under this Section 2.6 of
notice of the commencement of any action (including any governmental action) for
which a party may be entitled to indemnification hereunder, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 2.6, give the indemnifying party notice of the
commencement thereof. The indemnifying party shall have the right to
participate in such action and, to the extent the indemnifying party so desires,
participate jointly with any other indemnifying party to which notice has been
given, and to assume the defense thereof with counsel mutually satisfactory to
the parties; provided,
however, that an indemnified party (together with all other indemnified
parties that may be represented without material conflict by one counsel, as
determined in good faith opinion of such counsel) shall have the right to retain
one separate counsel, with the 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 action. The failure to give
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.6, to the extent that such failure materially
prejudices the indemnifying party’s ability to defend such
action. The failure to give 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 2.6.
(d) To
provide for just and equitable contribution to joint liability under the
Securities Act in any case in which either (i) any party otherwise entitled to
indemnification hereunder makes a claim for indemnification pursuant to this
Section 2.6 but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this Section 2.6 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any party hereto for which indemnification is
provided under this Section 2.6, then, and in each such case, such parties will
contribute to the aggregate losses, claims, damages, liabilities, or expenses to
which they may be subject (after contribution from others) in such proportion as
is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party
in connection with the statements, omissions, or other actions that resulted in
such loss, claim, damage, liability, or expense, as well as to reflect any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or allegedly untrue statement of a
material fact, or the omission or alleged omission of a material fact, relates
to information supplied by the indemnifying party or by the indemnified party
and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission; provided, however,
that, in any such case, (x) each selling Shareholder will not be required to
contribute any amount in excess of the public offering price of all such
Registrable Securities offered and sold by such selling Shareholder pursuant to
such registration statement, and (y) no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation; and provided further that in no
event shall a selling Shareholder’s liability pursuant to this Section 2.6(d), when
combined with the amounts paid or payable by such selling Shareholder pursuant
to Section
2.6(b), exceed the proceeds from the offering received by such selling Shareholder, except in
the case of willful misconduct or fraud by such selling
Shareholder.
(e) The
obligations of the Company and Shareholder under this Section 2.6 shall
survive the completion of any offering of Registrable Securities in a
registration under this Section 2, and otherwise
shall survive the termination of this Agreement.
2.7 Compliance. Each
Shareholder covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to the registration
statement.
3. Miscellaneous.
3.1 Successors and
Assigns. This Agreement may be assigned by a Shareholder to a transferee of Registrable
Securities with the consent of the Company, which consent will not be considered
by the Company unless it is furnished with written
notice of the name and address of the proposed assignee and transferee of the
Registrable Securities and such assignee
and transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement. The terms and conditions of
this Agreement inure to the benefit of and are binding upon the respective
successors and permitted assignees of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and permitted assignees any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
3.2 Governing Law; Jurisdiction
and Venue.
(a) This
Agreement, and all disputes or controversies between the parties arising out of
or related to the subject matter of this Agreement, shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Pennsylvania,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
(b) The
parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of
the federal and state courts located within the geographic boundaries
of the Commonwealth of Pennsylvania for the purpose of any suit,
action or other proceeding arising out of or based upon this Agreement, (b)
agree not to commence any suit, action or other proceeding arising out of or
based upon this Agreement except in the federal and state courts located within
the geographic boundaries of the Commonwealth of Pennsylvania and (c) hereby
waive, and agree not to assert, by way of motion, as a defense, or otherwise, in
any such suit, action or proceeding, any claim that it is not subject personally
to the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or the subject matter hereof may
not be enforced in or by such court.
3.3 Notices. All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given upon the earlier of actual
receipt or: (i) personal delivery to the party to be notified; (ii) when sent,
if sent by facsimile during the recipient’s normal business hours, and if not
sent during normal business hours, then on the recipient’s next business day; or
(iii) one (1) business day after the business day of deposit with a nationally
recognized overnight courier, freight prepaid, specifying next-day delivery,
with written verification of receipt. In the case of each
Shareholder, all communications shall be sent to the respective addresses as set
forth in the Subscription Agreement for Series C Shares and, in the case of the
Company, to the principal office of the Company
and to the attention of the Chief Executive Officer, or to such facsimile
number or address as subsequently modified by written notice given in accordance
with this Section
3.3.
3.4 Amendments and
Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance, and either retroactively or prospectively) only with the
written consent of the Company and Shareholders holding at least a majority of
the Registrable Securities. No waivers of or exceptions to any term,
condition, or provision of this Agreement, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such term,
condition, or provision.
3.5 Entire
Agreement. This Agreement constitutes the full and entire
understanding and agreement among the
parties with respect to the subject matter hereof, and any other written or oral
agreement or other negotiations, representations and understandings relating to
the subject matter hereof existing between the parties are expressly superseded
hereby.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
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The
Company:
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By:
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Name:
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Title:
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Shareholders:*
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Name:
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*May be
deemed executed by each Shareholder by virtue of its execution of the
Subscription Agreement for the Series C Shares.
{Signature
Page to Registration Rights Agreement}
