Exhibit 3
Registration Rights Agreement
This Registration Rights Agreement (the "Agreement") is made and entered into as
of December 6, 1999, by and between Imperial Petroleum Recovery Corporation, a
Nevada corporation (the "Company"), and The Xxxxxxx Family Trust dtd 10/1/87
Xxxx & Xxxxxxxx Xxxxxxx Trustees, (the "Holder").
This Agreement is made in connection with the private sale of 292,276 shares of
the Company's common stock, $.001 par value per share (together with any other
equity securities that may be issued by the Company with respect to or in
substitution for such common stock, the "Common Stock"), and a Warrant to
purchase up to 1,116,071 shares of the Common Stock (the "Warrant") pursuant to
a Purchase Agreement between the Company and the Holder effective as of June 24,
1999, (the "Purchase Agreement"). To induce the Holder to enter into the
Purchase Agreement, the Company has agreed to provide the Holder with the
registration rights set forth in this Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Registration under the Securities Act of 1993.
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(a) If before the earlier of October 6, 2003, and the date on which
85% or more of the aggregate of the 292,276 shares of Common Stock
purchased under the Purchases Agreement and the 1,116,071 shares
of Common Stock purchasable under the Warrant (together with the
292,276 shares of Common Stock purchased under the Purchase
Agreement, the "Registrable Shares") may be sold without regard to
the volume limitation in Rule 144(e) under the Securities Act of
1933, as amended (the "Securities Act"), or any successor
provision, the Holder requests that the Company file a
registration statement under the Securities Act covering the
public offer and sale or the Registrable Shares, the Company will
(i) promptly notify all the holders of Shares that such
registration statement will be filed and that all Registrable
Shares will be included in the registration statement at each such
holder's request if such request is received within 30 days of the
notice to the holder, (ii) cause such registration statement to
cover all Registrable Shares which it has been so requested to
include, (iii) use its commercially reasonable efforts to cause
such registration statement to become effective as soon as
practicable, and (IV) take all other action necessary under any
federal or state law or regulation of any governmental authority
to permit all Registrable Shares that it has been so requested to
include in such registration statement to be sold or otherwise
disposed of, and will maintain compliance with each such federal
and state law and regulation for 180 days or for the period
necessary for the requesting holders to effect their proposed sale
or other depositions, whichever is shorter. The Company shall be
required to effect a registration pursuant to this Subsection 1(a)
with respect to the Registrable Shares on one occasion only.
(b) If at any time the Holder or any holder of Registrable Shares
agrees to bear the out-of-pocket cost to the Company solely
attributable to the registration of Registrable Share of the
Holder or holders, such Holder or holders shall notify the company
and the Company will (i) promptly prepare and file a registration
statement under Securities Act and include therein all Registrable
Shares requested by the Holder or holders to be so included, (ii)
use its commercially reasonable efforts to cause such registration
statement to become effective as soon as practicable, (iii) take
all other action necessary under any federal or state law or
regulation of any governmental authority to permit all Registrable
Shares included in the registration statement to be sold or
otherwise disposed of and (iv) maintain compliance with each such
federal and state law and regulation for the period necessary for
the Holder or holders to effect its proposed sale or other
deposition.
(c) The Company shall not be obligated, however, to take any actions
pursuant to Subsection 1(a) or Subsection 1(b):
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(i) In any particular jurisdiction (A) in which the Company
would be required to execute a general consent to service
of process in effecting registration, qualification, or
compliance unless the Company is already subject to general
service in such jurisdiction and except as may be required
by the Securities Act or (B) which refuses to qualify the
shares of the common Stock after the Company has duly
applied for such qualification and has taken all
commercially reasonable steps necessary to effect such
qualification.
(ii) During the period starting with the date 60 days before the
company's estimated date of filing of, and ending on the
date 90 days immediately following the effective date of,
any registration statement pertaining to securities of the
Company (other than a registration on Form S-4 or S-8 or
successor forms) if the Company is actively employing in
good faith all commercially reasonable efforts to cause
such registration statement to become effective and the
Company's estimate of the date of filing the registration
statement is made in good faith.
(iii) If the Company furnishes to the requesting Holder or
holders of their representative a certificate signed by its
President stating that in the good faith judgement of the
Board of Directors it would be seriously detrimental to the
company or its stockholders for a registration statement to
be filed in the near future, in which case the Company's
obligation to take any actions pursuant to Subsection1(a)
or Subsection1(b) shall be deferred for a period not to
exceed 90 days from the date of receipt of the written
request from the Holder or holders.
(iv) If the Company determines that compliance with the request
for registration will not permit the use of regular audited
year-end financial statements with supplemental short
period financial statements. In such a case, however, the
Company may only postpone a registration under Subsection
1(a) or Subsection I (b) for the period of time, not
exceeding 90 days, that will permit their use, unless the
Holder or holders proposing to distribute shares agree to
bear the costs of any special audits.
(d) Notwithstanding anything herein to the contrary, if the holders
proposing to distribute Registrable Shares desire a registration
requested pursuant to Subsection 1(a) or 1(b) to involve an
underwriting, such holders shall so advise the Company as part of
the notice given pursuant to Subsection 1(a) or 1(b) and shall
have the right to select the underwriter or underwriters, which
choice shall be subject to the approval by the Company.
(e) The company shall (together with all holders proposing to
distribute their Registered Shares through such underwriting)
enter into an underwriting agreement in customary form with any
managing underwriting selected for such underwriting pursuant to
Subsection i(d). Notwithstanding any other provision of this
section 1, if the managing underwriter advised the holders in
writing that marketing factors require a limitation of the number
of shares to be underwritten, then the Company will so advise all
holders of Registrable Shares and the number of Registrable Shares
that may be included in the registration and underwritten will be
allocated among all holders thereof in proportion as nearly as
practicable to the respective amount of Registrable Shares
requested to be included by such holders at the time of filing the
registration statement. No Registrable Shares excluded from the
underwriting by reason of the underwriter's marketing limitation
are required to be included in such registration, and the
Registrable Shares so excluded will no longer be entitled to be
registered on demand of the holders thereof under the terms of
Subsection 1(a). To facilitate the allocation of shares in
accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any
holder to the nearest 100 shares. If any holder of Registrable
Shares disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the Company.
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(f) If any time and from time to time within two years after the last
purchase of Registrable Shares under the Warrant, the Board of
Directors of the Company authorizes the filing of a registration
statement under the Securities Act (otherwise than under
Subsection 1(a) or Subsection 1(b) hereof and other than a
registration statement on Form S-4 or Form S-8 or other form that
may not be used by the holders to distribute their Registrable
Shares) in connection with the proposed offer of any of its equity
securities by it or any of its security holders, the Company
will(i) promptly notify the Holder of this Warrant and each holder
of Registrable Shares that such registration statement will be
filed and that Registrable Shares will, at such holder's request
within 20 days of the giving of notice to the holder, be included
in such registration statement, (ii) include in the securities
covered by such registration statement all Registrable Shares that
it has been so requested to include, (iii) use its commercially
reasonable efforts to cause such registration statement to become
effective as soon as practicable, and (iv) take all other action
necessary under any federal or state law or regulation of any
governmental authority to permit all Registrable Shares that it
has been requested to include in such registration statement to be
sold or otherwise disposed of, and will maintain compliance with
each such federal and state law and regulation for the period
necessary for such holders to effect the proposed sale or other
disposition, but shall not be required to maintain such compliance
for longer than 90 days. If the registration of which the Company
gives notice is for a registered public offering involving and
underwriting, the Company shall so advise the holders. In such
event, the right of any holder to registration shall be
conditioned upon such holder's participation in such underwriting
and the inclusion of such holder's Registrable Shares in the
underwriting to the extent provide herein. All holders proposing
to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision herein, if the
managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the
managing underwriter may limit such Registrable Shares to be
included in such registration, it being understood that the shares
proposed to be sold by the Company and such security holders in
such underwriting shall be given priority and shall not be subject
to any such limitation applicable to Registrable Shares. The
Company shall so advise all holders of Registrable Shares
proposing to distribute securities through such underwriting, and
the number of Registrable Shares that may be included in the
registration and underwriting shall be allocated among all such
holders in proportion, as nearly as practicable, to the respective
amount of Registrable Shares proposed to be distributed by each
such holder.
(g) Whenever the Company is required pursuant to the provisions of
this Section 1 to include shares in a registration statement, the
Company is required to (i) furnish each holder of Registrable
Shares included in the registration statement and each underwriter
with such copies of the prospectus, including any preliminary
prospectus, conforming to the Securities Act (and such other
documents as each such holder or each such underwriter may
reasonably request) in order to facilitate the sale or
distribution of the shares, (ii) use its best efforts to register
or qualify such holders and each underwriter of shares being sold
by such holders shall reasonably request, and (iii) take such
other actions as may be reasonably necessary or advisable to
enable such holders and such underwriters to consummate the sale
or distribution in such jurisdictions in which such holders shall
have reasonably requested that the shares be sold.
(h) The Company shall pay all expenses incurred in connection with any
registration or other action pursuant to the provisions of
Subsection 1(a) or Subsection 1(f) other than (i) underwriting
discounts and applicable transfer taxes relating to the
Registrable Shares and (ii) fees and expenses of counsel,
accountants, advisers, and other persons separately retained by
the holders of Registrable Shares included in the registration
statement.
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(i) The Company will agree to identify the holders of Registrable
Shares that are included in each registration statement filed
pursuant to this Section 1 and such holders will agree to
indemnify the Company and any underwriters, to the extent
customary.
(j) The Holder shall have no right to take any action to restrain,
enjoin, or otherwise delay any registration as a result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 1.
(k) The holders of Registrable Shares included in any registration
shall, as a condition precedent to the Company's obligation to
register such securities, furnish to the Company such information
regarding themselves, the shares of common Stock held by them, and
the distribution proposed by such holders as the company may
reasonably request in writing and as shall be required in
connection with any registration, qualification, or compliance
referred to in this Agreement. At the request of the Company, each
holder who is including any Registrable Shares in the registration
shall deposit in escrow with an escrow agent chosen by the Company
those Registrable Shares that such Holder proposes to sell,
accompanied by an irrevocable power of attorney authorizing the
escrow agent to, without limitation, sell such Registrable Shares
to the underwriter upon the effectiveness of the registration
statement.
2. Transferability. This Agreement is transferable or assignable by the Holder
in whole, but not in part.
3. Communications. No notice, or other communication under this Agreement
shall be effective unless, but any notice or other communication shall be
effective and shall be deemed to have been given or delivered if and when,
the same is in writing and is physically delivered or mailed by
first-class, postage prepaid, addressed to:
(a) the Company at 00000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000, or such other address as the Company has designated
in writing to the Holder, or
(b) the Holder at 0 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxx 00000, or such
other address as the Holder has designated in writing to the
Company.
4. Headings. The headings of this Agreement have been inserted as a matter of
convenience and shall not affect the construction hereof.
5. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada, without giving effect to
the principles of conflicts of law thereof.
IN WITNESS WHEROF, the parties have caused this Registration Rights Agreement to
be signed this the 6th day of December, 1999.
IMPERIAL PETROLEUM RECOVERY CORPORATION
By:_______________________________
Xxxxx Xxxxxx - Secretary, Treasurer - IPRC
The Xxxxxxx Family Trust dtd 10/1/87 Xxxx & Xxxxxxxx Xxxxxxx Trustees
By:_______________________________
Managing Member
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