REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of September
30, 2009, by and among Ecology Coatings, Inc., a Nevada corporation (the
"Company"), and, Xxxxxxxxx Acquisition Corporation, an Illinois corporation (the
“Holder”).
WHEREAS,
the Company entered into that certain Securities Purchase Agreement with Holder
on September 30, 2009 (the “Securities Purchase Agreement”);
WHEREAS,
in connection therewith, the Company issued to the Holder certain shares of its
Convertible Preferred Stock convertible into shares of its restricted Common
Stock (the "Restricted Stock");
WHEREAS,
in connection therewith, the Company issued to the Holder warrants to purchase
shares of its restricted Common Stock (the “Warrant Stock”);
WHEREAS,
in order to induce the Holder to approve the Securities Purchase Agreement, the
Company has entered into this Agreement to register the Restricted Stock and
Warrant Stock of the Holder in accordance with the provisions of this Agreement;
and
WHEREAS,
the Restricted Stock and Warrant Stock is collectively referred to in this
Agreement as the "Registrable Securities."
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained in
this Agreement, the parties hereto agree as follows:
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I.
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PIGGYBACK
REGISTRATION.
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a. Right To
Piggyback. During the period beginning on the effective date of the Securities
Purchase Agreement through the fifth (5th)
anniversary thereof, whenever the Company proposes to register any of its
securities under the Act (other than a registration on Form S-4 or S-8 or any
similar successor form) and the registration form to be used may be used for the
registration of the Shares (a "Piggyback Registration"), the Company will give
prompt written notice to the Holder of its intention to effect such a
registration and will include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within twenty (20) days after the Holder’s receipt of the Company’s
notice; provided, that (i) if, at any time after giving written notice of its
intention to register any securities but prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason to terminate, withdraw or reduce the number of
shares to be included in such registration, the Company shall give written
notice of such determination to the Holder and the Company shall not be relieved
of its Piggyback Registration obligation to register such Registrable Securities
pursuant to this Section 1 and (ii) if such registration involves an
underwritten offering, the Holder must sell its Registrable Securities to the
underwriters of such offering on the same terms and conditions as apply to the
Company or other Holder of Registrable Securities for whose account securities
are to be sold, as the case may be. If a registration requested pursuant to this
Section involves an underwritten public offering, the Holder may elect in
writing, not later than three (3) days prior to the effectiveness of the
registration statement filed in connection with such registration, not to sell
the Registrable Securities in connection with such registration. Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration. The Company will keep the registration statement filed under
this Agreement continuously effective for one (1) year following the effective
date of the registration. The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act, and the declaration or ordering of the
effectiveness of such registration statement.
b. Piggyback
Expenses. The Registration Expenses (as defined in Section 2) of the Piggyback
Registrations and all Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to this Agreement shall be
paid by the Company.
c. Priority
in Piggyback Registrations. If (i) a Piggyback Registration pursuant to this
Section 1 involves an underwritten offering of the securities so being
registered, whether or not for sale for the account of the Company, to be
distributed (on a firm commitment basis) by or through one or more underwriters
of recognized standing under underwriting terms appropriate for such a
transaction and (ii) the managing underwriter of such underwritten offering
informs the Company and the Holder of the Registrable Securities requesting such
registration by letter of opinion that the number of securities requested to be
included in such registration exceeds the number which can be supported by
market factors, the Company will include in such registration securities in the
following order of priority:
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i.
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first,
all the securities the Company proposes to sell for its own account;
and
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ii.
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second,
to the extent that the number of securities which the Company proposes to
include is less than the number of securities which the Company has been
advised can be supported by market factors in such offering, the number of
such Registrable Securities requested to be included in such Piggyback
Registration by the Holder as well as other substantially similar
securities of the Company prorata as a
group.
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d.
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Company
Obligations. In the case of each registration, qualification or compliance
effected by the Company pursuant to this Agreement, the Company will keep
the Holder advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. At its
expense, the Company will furnish such number of prospectuses and other
documents incident thereto as the Holder from time to time may reasonably
request.
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II.
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REGISTRATION
EXPENSES.
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a. All
expenses incident to the Company’s performance of or compliance with this
Agreement, including, without limitation, all registration, qualification and
filing fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, escrow fees, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons, as defined in Section 2(2) of the Act (a "Person"), retained by the
Company (all such expenses being herein called "Registration Expenses"), will be
borne as provided in this Agreement, except that the Company will, in any event,
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing the securities to be
registered on each securities exchange or quotation system on which similar
securities issued by the Company are then listed or quoted.
b. The
Company will bear the Registration Expenses allocable to the registration of the
Registrable Securities. If the Holder chooses to be represented by separate
counsel in connection with the registration of the Registrable Securities, then
the Holder will bear the cost of such separate legal counsel.
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III.
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INDEMNIFICATION.
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a. The
Company agrees to indemnify, to the extent permitted by law, the Holder and the
Holder’s legal counsel and accountants, and each person controlling the Holder
within the meaning of the Act, with respect to which registration, qualification
or compliance has been effected pursuant to this Agreement, against all losses,
claims, damages, liabilities and expenses (or actions in respect thereof),
including any of the foregoing incurred in settlement of litigation, commenced
or threatened, arising out of or based on any untrue statement or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, offering circular, preliminary prospectus or other document, or any
amendment thereof or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of any rule or regulation
promulgated under the Act or any state securities laws applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, qualification or compliance, and will reimburse the
Holder and the Holder’s legal counsel and accountants, and each person
controlling such Holder within the meaning of the Act, for any legal and any
other expenses reasonably incurred in connection with investigation, preparing
or defending any such claim, loss, damage, action or liability, except insofar
as the same arises out of or is based on any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by an instrument duly executed
by the Holder and stated to be specifically for use therein or by the Holder’s
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto at or prior to the written confirmation of the
sale of such securities to such person in any case where such delivery of the
prospectus or registration statement (as amended or supplemented) is required by
the Act after the Company has furnished the Holder with a sufficient number of
copies of the same. In connection with an underwritten offering, the Company
will indemnify such underwriters, their officers and directors and each Person
who controls such underwriters (within the meaning of the Act) to the same
extent as provided above with respect to the indemnification of the Holder
above.
b. In
connection with any registration statement in which the Holder is participating,
the Holder will furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with any
such registration statement or prospectus and, to the extent permitted by law,
will indemnify the Company, its directors and officers, its legal counsel and
independent accountants, and each Person who controls the Company (within the
meaning of the Act) with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, against all losses,
claims, damages, liabilities and expenses (or actions in respect thereof),
including any of the foregoing incurred in settlement of litigation, commenced
or threatened, arising out of or based on any untrue statement or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, offering circular, preliminary prospectus or other document, or any
amendment thereof or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, and will reimburse the Company, its directors and officers and
controlling Persons, for any legal and any other expenses reasonably incurred in
connection with investigation, preparing or defending any such claim, loss,
damage, action or liability, except insofar as the same arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by the Holder and stated
to be specifically for use therein.
c. Any
Person entitled to indemnification hereunder will (i) give prompt written notice
to the indemnifying party after such indemnified party has actual knowledge of
any claims as to which indemnity may be sought and (ii) unless in such
indemnified party’s reasonable judgment and based on advice of its legal
counsel, a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, shall permit such indemnifying
party to assume the defense of such claim or litigation with counsel reasonably
satisfactory to the indemnified party and the indemnified party may participate
in such defense at such party’s own expense, and provided further that the
failure of any indemnified party to give notice as provided herein shall not
relive the indemnifying party of its obligations under this Agreement, except to
the extent, but only to the extent, that the indemnifying party’s ability to
defend against such claim or litigation is impaired as a result of such failure
to give notice. If such defense is assumed, the indemnifying party will not be
subject to any liability for any settlement or entry of any judgment made or
consented to by the indemnified party without its consent (but such consent will
not be unreasonably withheld) and which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release of all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in such indemnified party’s reasonable judgment and based on
advice of its legal counsel, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim.
d. The
indemnification provided for under this Agreement will remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
party or any officer, director or controlling Person of such indemnified party
and will survive the transfer and registration of securities. The Company also
agrees to make such provisions as are reasonably requested by any indemnified
party for contribution to such party in the event the Company’s indemnification
is unavailable for any reason.
IV. RULE 144
AND 144A. In order to permit the Holder to sell the Registrable Securities, if
they so desire, pursuant to Rule 144 or Rule 144A promulgated by the Securities
and Exchange Commission (the "SEC") (or any successors to such rules), the
Company will use best efforts to comply with all rules and regulations of the
SEC applicable in connection with the use of each of Rule 144 and Rule 144A (or
any successors thereto), including the timely filing of all reports with the SEC
and the provision of any information regarding the Company in order to enable
the Holder, if they so elect, to utilize Rule 144 or Rule 144A, and the Company
will cause any restrictive legends to be removed and any transfer restrictions
to be rescinded with respect to any sale of the Registrable Securities that is
exempt from registration under the Act pursuant to Rule 144 or Rule 144A. Upon
the request of a Holder, the Company will deliver to such Holder a written
statement verifying that it has complied with such requirements.
V. TRANSFER
OF REGISTRATION RIGHTS. The Holder may transfer the right to register the Shares
under this Agreement to any ancestor, descendant or any custodian or trustee for
his or her own account to whom the Holder has transferred any of the Shares,
including, but not limited to, any transfer by the Holder to any of the
foregoing parties or other entities for estate planning purposes.
VI. LISTING
OF SECURITIES TO BE REGISTERED. In connection with any registration hereunder,
the Company will use its best efforts to list all Registrable Securities covered
by such registration statement on any securities exchange or quotation system on
which any of the securities of the same class as the Registrable Securities are
then listed or quoted.
VII. REPRESENTATIONS
AND WARRANTIES OF COMPANY. The Company makes the following representations and
warranties in connection with the this Agreement:
a. The
Company is a corporation duly organized and existing in good standing under the
laws of the State of Nevada. The Company has full corporate power and authority
to carry on its business as now conducted and to own or lease and operate the
properties and assets now owned or leased and operated by it. The Company is
duly qualified to transact business in the State of Nevada and all states and
jurisdictions in which the business or ownership of its property makes it
necessary to so qualify, except for jurisdictions in which the nature of the
property owned or business conducted, when considered in relation to the absence
of serious penalties, renders qualification as a foreign corporation unnecessary
as a practical matter.
b. The
transactions contemplated by this Agreement have been duly approved by the Board
of Directors of the Company.
c. The
Agreement is valid and binding upon the Company and neither the execution nor
delivery of the Agreement by the Company nor the performance by the Company of
any of its covenants or obligations under the Agreement will constitute a
default under any contract, agreement or obligation to which the Company is
bound. The Agreement is enforceable against the Company in accordance with their
respective terms, subject to bankruptcy, reorganization, insolvency, fraudulent
conveyance, moratorium, receivership or similar laws relating to or affecting
creditors’ rights generally. The party executing the Agreement on behalf of the
Company has full power and authority to do so and to bind the Company under the
Agreement.
d. The
Restricted Shares and Warrant Shares, when issued, shall be duly authorized,
validly issued, fully paid and non-assessable.
e. The
Company has no obligations to pay any fees, commissions or other compensation in
connection with the transactions contemplated in the Agreement.
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VIII.
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MISCELLANEOUS.
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a. Cessation
of Status as Registrable Securities. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when they
have (i) been effectively registered under the Act and disposed of in accordance
with the registration statement covering them, (ii) become eligible for sale
pursuant to, and have actually been sold to the public in compliance with, Rule
144(k) (or any similar provision then in force) under the Act, or (iii) been
otherwise transferred and new certificates for them not bearing any restrictive
legends have been delivered by the Company.
b. No
Inconsistent Agreements. The Company will not hereafter enter into, or permit to
exist, any agreement with respect to its securities which is inconsistent with
the rights granted to the Holder in this Agreement, without its prior unanimous
written consent.
IX. Remedies.
The Holder, having rights under any provision of this Agreement, will be
entitled to enforce such rights specifically, to recover damages caused by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
X. Amendments
and Waivers. Except as otherwise provided herein, the provisions of this
Agreement may be amended and the Company may take any action herein prohibited
or omit to perform any act herein required to be performed by it, only if the
Company has obtained the written consent of all of the Holder.
XI. Successors
and Assigns. All covenants and agreements in this Agreement by or on behalf of
any of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or
not.
XII. Governing
Law and Jurisdiction. This Agreement shall be governed and construed in
accordance with the laws of the State of Michigan[Michigan in Securities
Purchase Agreement]. Each party to this Agreement hereby irrevocably agrees that
any legal action or proceeding arising out of or relating to this Agreement or
any agreements or transactions contemplated hereby may be brought in the courts
of the State of Michigan or of the United States of America for the Eastern
District of Michigan and hereby expressly submits to the personal jurisdiction
and venue of such courts for the purposes thereof and expressly waives any claim
of improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Section 9.10 "Notices," such service to become effective ten (10)
days after such mailing.
XIII. Entire
Agreement. This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof.
XIV. Delays or
Omissions. No delay or omission to exercise any right, power or remedy accruing
to the Holder, upon any breach or default of the Company under this Agreement,
shall impair any such right, power or remedy of the Holder nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereunder occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of the Holder of any
breach or default under this Agreement or any waiver on the part of the Holder
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise afforded to the
Holder, shall be cumulative and not alternative.
XV. Counterparts.
This Agreement may be executed in any number of counterparts each of which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one instrument. Any telecopied signature of a
party on this Agreement shall be deemed an original signature of such party for
all purposes.
XVI. Notices.
All notices and other communications required or permitted hereunder shall be in
writing and shall be mailed by registered or certified mail, postage prepaid or
otherwise, delivered by hand or by messenger, or by facsimile, addressed (i) if
to the Holder, to such address as the Holder shall have furnished to the Company
in writing, or (ii) if to the Company, to its principal executive offices and
addressed to the attention of the Chief Executive Officer, or to such other
address as the Company shall have furnished to the Holder in writing. Each such
notice or other communication for all purposes for this Agreement shall be
treated as effective, or having been given when delivered, if delivered
personally or by facsimile, or, if sent by mail, at the earlier of its receipt
or seventy-two (72) hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first above written.
/s/ Xxxxxx X.
Xxxxxxxx
By: Xxxxxx
X. Xxxxxxxx
Its: CEO
XXXXXXXXX
ACQUISITION CORPORATION
/s/ Xxxxxxx
Xxxxxxxxx
By: Xxxxxxx
Xxxxxxxxx
Its: President
