PROCESS TECHNOLOGY SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made by and
between Process Technology Systems, Inc., a Nevada corporation (the
"Company"), and __________________________ (the "Holder"), as of __ day of
_______________, 2005.
W I T N E S S E T H:
WHEREAS, the Holder will be issued ______________ shares of Company
common stock ("Common Stock") pursuant to his/her/its Subscription Agreement;
and
WHEREAS, the Company desires to grant to the Holder certain registration
rights in respect of the resale of the Common Stock as granted under the
Subscription Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE ONE
Registration Rights Agreement
SECTION 1.1 Registration Rights Available. The Company agrees to
provide Holder with respect to the Common Stock to be issued to Holder and any
other securities issued or issuable at any time or from time to time in
respect of the shares of Common Stock upon a stock split, stock dividend,
recapitalization or other similar event involving the Company (collectively,
the "Securities"), one demand secondary offering by means of registration
pursuant to the Securities Act of 1933, as amended ("Securities Act"), subject
to the provisions of this Agreement (the demand registration right is referred
to herein as the "Registration Right"), subject to the closing of a
Reorganization Transaction, meaning a material acquisition, reorganization,
merger or other transaction such that the Company will no longer be considered
to be a "blank check company" as defined in Rule 504(a)(3) of the Securities
and Exchange Commission (the "Commission").
SECTION 1.2 Demand Registration. With respect to Holder's right to one
demand Registration Right pursuant to Section 1.1 (a), the parties agree as
follows:
(a) Subject to the closing of a Reorganization Transaction, the
Company shall promptly, and in any event, no later than 90 days from the
closing of a Reorganization Transaction, file with the Commission and use its
"best efforts" to cause to become effective at the earliest possible date, a
registration statement on the appropriate form relating to the offer and sale
of the Common Stock by Holder. The Company agrees to provide Holder with
notice of the filing of such registration statement and of the filing of any
amendments or supplements thereto.
(b) The Company agrees to maintain such registration statement in
effect for the earlier of (i) a period of not less than 36 months or (ii)
until the Holder has sold all of Holder's Securities included in such
registration statement.
(c) In any offering pursuant to this Section that becomes effective in
which the Holder participates, the Company shall use its best efforts to keep
available to the Holder a prospectus meeting the requirements of Section
10(a)(3) of the Securities Act and shall file all amendments and supplements
under the Securities Act required for that purpose. In any offering pursuant
to this Section the Company will, as soon as practicable, use its best efforts
to effect such registration and use its best efforts to effect such
qualification and compliance as may be so requested and as would permit or
facilitate the distribution of such Securities, including, without limitation,
registration under the Securities Act, appropriate qualifications under
applicable blue-sky or other state securities laws, appropriate compliance
with any other governmental requirements and listing on a national securities
exchange on which the Common Stock is then listed or inter-dealer quotation
system.
SECTION 1.3 Registration Procedure. With respect to the Registration
Right, the following provisions shall apply:
(a) Holder shall be obligated to furnish to the Company such
information regarding the Securities and the proposed manner of distribution
of the Securities as the Company and the underwriters (if any) may request in
writing and as shall be required in connection with any registration,
qualification or compliance referred to herein and shall otherwise cooperate
with the Company and the underwriters (if any) in connection with such
registration, qualification or compliance.
(b) With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of the
Restricted Securities (used herein as defined in Rule 144 under the Securities
Act) to the public without registration, the Company agrees to use its best
lawful efforts to:
(i) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
during which the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act (at all times during which the Company is subject to such reporting
requirements); and
(iii) So long as Holder owns any Restricted Securities, to furnish to
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 and with regard to
the Securities Act and the Exchange Act (at all times during which the Company
is subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of
the Company and other information in the possession of or reasonably
obtainable by the Company as Holder may reasonably request in availing
themselves of any rule or regulation of the Commission allowing Holder to sell
any such securities without registration.
(c) The Company agrees that it will furnish to Holder such number of
prospectuses, offering circulars or other documents incident to any
registration, qualification or compliance referred to herein as provided or,
if not otherwise provided, as the Holder from time to time may reasonably
request.
(d) Except for the legal fees of Holder and any sales commissions that
may be paid by Holder, all expenses of any registrations permitted pursuant to
this Agreement and of all other offerings by the Company (including, but not
limited to, the expenses of any qualifications under the blue-sky or other
state securities laws and compliance with governmental requirements of
preparing and filing any post-effective amendments required for the lawful
distribution of the Securities to the public in connection with such
registration, of supplying prospectuses, offering circulars or other
documents) will be paid by the Company.
(e) The Registration Right of this Agreement, subject to the terms and
conditions hereof, shall be available to any subsequent holder of the
Securities owned by Holder. Each subsequent holder entitled to the
Registration Right under this Agreement shall be bound by the terms and
subject to the obligations of this Agreement as though it were an original
signatory hereto.
ARTICLE TWO
Indemnification
SECTION 2.1 Indemnification by the Company. In the event of any
registration of the Securities of the Company under the Securities Act, the
Company agrees to indemnify and hold harmless Holder and each other person who
participates as an underwriter in the offering or sale of such securities
against any and all claims, demands, losses, costs, expenses, obligations,
liabilities, joint or several, damages, recoveries and deficiencies, including
interest, penalties and attorneys' fees (collectively, "Claims"), to which
Holder may become subject under the Securities Act or otherwise, insofar as
such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based on any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which Holder's Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, 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, and the Company will
reimburse Holder and each such underwriter for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim (or action or proceeding in respect thereof); provided that the
Company shall not be liable in any such case to the extent that any such Claim
(or action or proceeding in respect thereof) or expense arises out of or is
based on an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance on and in conformity with written information furnished to the
Company through an instrument duly executed by Holder specifically stating
that it is for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
Holder or any such underwriter and shall survive the transfer of the
Securities by Holder.
SECTION 2.2 Indemnification by Holder. The Company may require, as a
condition to including the Securities in any registration statement filed
pursuant to this Agreement, that the Company shall have received an
undertaking satisfactory to it from Holder, to indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 2.1) the
Company, each director of the Company, each officer of the Company and each
other person, if any, who controls the Company, within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance on and in conformity with written information furnished to the
Company through an instrument duly executed by Holder specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Notwithstanding the foregoing, the maximum liability hereunder
which any holder shall be required to suffer shall be limited to the net
proceeds to such Holder from the Securities sold by such Holder in the
offering. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of the Securities
by Holder.
SECTION 2.3 Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a Claim referred to in this Article Two, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Article Two, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnifying party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such Claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect of such Claim.
SECTION 2.4 Indemnification Payments. The indemnification required by
this Article shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
ARTICLE THREE
Miscellaneous
SECTION 3.1 Consent to Amendments. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended or waived
only by the written agreement of the Company and the Holder of 51% or more of
the shares of Common Stock sold pursuant to the offering contained in the
Subscription Agreement to which this Agreement is appended as Exhibit A and
shall be effective only to the extent specifically set forth in such writing.
SECTION 3.2 Term of the Agreement. Subject to Section 1.2(b) hereof,
this Agreement shall terminate with respect to Holder on the Securities having
been registered as provided in Article One, provided continued registration of
the Common Stock is maintained in accordance with this Agreement.
SECTION 3.3 Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto are transferable and will bind and
inure to the benefit of the respective successors and assigns of the parties
hereto, but only if so expressed in writing.
SECTION 3.4 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
SECTION 3.5 Delays or Omissions. No failure to exercise or delay in
the exercise of any right, power or remedy accruing to Holder on any breach or
default of the Company under this Agreement shall impair any such right, power
or remedy nor shall it be construed to be a waiver of any such breach or
default.
SECTION 3.6 Remedies Cumulative. All remedies under this Agreement, or
by law or otherwise afforded to any party hereto shall be cumulative and not
alterative.
SECTION 3.7 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement. Unless clearly denoted otherwise, any reference to Articles
or Sections contained herein shall be to the Articles or Sections of this
Agreement.
SECTION 3.8 Notices. Any notices required or permitted to be sent
hereunder shall be delivered personally or mailed, certified mail, return
receipt requested, to the following addresses, and shall be deemed to have
been received on the day of personal delivery or within three business days
after deposit in the mail, postage prepaid:
If to the Company, to:
W. A. Xxxxxx, Jr., President
0000 Xxxxxxxx Xxx., Xxxxx 000
Xxxxxxx, XX 00000
If to Holder, to:
At the address indicated below.
SECTION 3.9 Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of the State of
Nevada applicable to contracts made and to be performed in that state.
SECTION 3.10 Final Agreement. This Agreement, together with those
documents expressly referred to herein, constitutes the final agreement of the
parties concerning the matters referred to herein, and supersedes all prior
agreements and understandings.
SECTION 3.11 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute
one instrument.
The parties hereto have executed this Agreement as of the date first set
forth above.
COMPANY:
PROCESS TECHNOLOGY SYSTEMS, INC.
By:
W. A. Xxxxxx, Jr., President
HOLDER:
By:
_______________________________________
(Print Name)
_______________________________________
(Xxxxxx Xxxxxxx)
_______________________________________
(City, State and Zip Code)
Number of Shares of
Common Stock purchased: _______
Date: _______.
