REGISTRATION RIGHTS AGREEMENT
EXHIBIT 10.26
This
Registration Rights Agreement (this “Agreement”) is made as of August 31, 2008
by GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation (the “Company”), for the
benefit of the Holders (as such term is hereinafter defined). The
Company hereby confirms that the rights granted under this Agreement constitute
a material inducement to the CVC California, LLC (the initial Holder) to enter
into the Loan Agreement, make Loans from time to time thereunder, and/or acquire
or hold Conversion Shares and/or Warrant Shares (as such terms are hereinafter
defined). Each Holder, by its participation or request to participate
in any Registration effected pursuant to this Agreement, shall be deemed to have
confirmed such Holder’s agreement to comply with the applicable provisions of
this Agreement.
NOW,
THEREFORE, the Company hereby agrees, in favor of the Holders, as
follows:
1.
Definitions. In
addition to those terms defined elsewhere in this Agreement, the following terms
shall have the following meanings wherever used in this Agreement:
“Acquired Company”
shall mean Island Environmental Services, Inc., a California corporation, all of
the issued and outstanding capital stock of which is being acquired by a
wholly-owned subsidiary of the Company on the date hereof.
“Act” shall mean the
Securities Act of 1933, as amended, and any successor statute from time to
time.
“Affiliate” shall
mean, with respect to any person, any other person controlling, controlled by or
under common control with the first person.
“Board” shall mean the
Board of Directors of the Company.
“Common Stock” shall
mean the authorized common stock of the Company.
“Company” shall mean
General Environmental Management, Inc., a Nevada corporation, and shall include
any successor(s) thereto.
“Conversion Shares”
shall mean the shares of Common Stock issuable at any time and from time to time
upon conversion of the Term Note in whole or in part.
“Costs and Expenses”
shall mean all of the costs and expenses relating to any subject Registration
Statement, including but not limited to registration, filing and qualification
fees, blue sky expenses, costs of listing any Shares on any exchange or other
trading media, and printing expenses, fees and disbursements of counsel and
accountants to the Company, and reasonable fees and disbursements of a single
counsel to the Holders; provided, however, that
underwriting discounts and commissions attributable solely to the securities
registered for the benefit of Holders, fees and disbursements of any additional
counsel to Holders, and all other expenses attributable solely to Holders shall
be borne by each subject Holder.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and any successor statute
from time to time.
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“Holders” shall mean,
collectively, all Persons holding Registrable Shares from time to
time.
“Loan Agreement” shall
mean the Revolving Credit and Term Note Agreement of even date herewith by and
between CVC California, LLC and the Company, as the same may be amended,
modified, supplemented and/or restated from time to time in accordance with the
provisions thereof.
“Loans” shall mean the
loans extended to the Company from time to time under and pursuant to the Loan
Agreement.
“Person” shall mean
any individual, corporation, partnership, limited partnership, limited liability
company, trust, or other entity of any kind ,and any government or department or
agency thereof.
“Registrable Shares”
shall mean all Shares, excluding any Shares which may then be sold by the Holder
thereof without volume limitation pursuant to Rule 144 promulgated under the
Act.
“Registration” shall
mean any registration of Common Stock pursuant to a registration statement filed
by the Company with the SEC in respect of any class of Common Stock, other than a registration
statement in respect of employee stock options or other employee benefit plans
or in respect of any merger, consolidation, acquisition or like combination,
whether on Form X-0, Xxxx X-0 or any equivalent form of registration then in
effect.
“Registration Period”
shall mean, with respect to a Registration Statement, the period of time from
the effective date of such Registration Statement until such date as is the
earlier of (a) the date on which all of the Registrable Securities covered
by such Registration Statement shall have been sold to the public, or
(b) the date on which the Warrant Shares issued or issuable upon cashless
exercise of the Warrant in accordance with Section 1.3 of the Warrant (in the
opinion of counsel to the Company evidenced by a written opinion issued to the
Holders in form and substance reasonably acceptable to the Holders) may be
immediately sold without restriction (including, without limitation, as to
volume restrictions) by each Holder thereof without registration under the
Act.
“Registration
Statement” shall mean any registration statement filed or to be filed by
the Company in respect of any Registration.
“SEC” shall mean the
United States Securities and Exchange Commission, or any successor agency or
agencies performing the functions thereof.
“Shares” shall mean
(a) the Conversion Shares issued and/or issuable from time to time, (b) the
Warrant Shares issued and/or issuable from time to time, and (c) any additional
or other shares of Common Stock issued in respect of any of the foregoing Shares
by reason of any stock split, stock dividend, merger, share exchange,
recapitalization or other such event.
“Term Note” shall mean
the Term Note issued pursuant to and as defined in the Loan
Agreement.
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“Warrants” shall mean
the warrants to purchase Shares, issued by the Company pursuant to the Loan
Agreement, including any and all warrants issued in replacement of the original
such warrants.
“Warrant Shares” shall
mean the Common Stock and/or other securities issued and/or issuable from time
to time upon exercise of any of the Warrants, and any additional or other Shares
issued in respect of any of the foregoing Shares by reason of any stock split,
stock dividend, merger, share exchange, recapitalization or other such
event.
2.
Shelf
Registration.
(a) The
Company shall prepare and file with the SEC (i) not later than forty-five (45)
days after the completion of the Company’s audit of the financial statements of
the Acquired Company (which audit the Company hereby agrees to commence promptly
after the date hereof and to complete as promptly as practicable after the date
hereof, in accordance with Regulation S-X and all other applicable rules and
regulations of the SEC with respect to material acquisitions), a Registration
Statement or Registration Statements (as necessary) on a form that is
appropriate under the Act (and, if available, pursuant to Rule 415 promulgated
under the Act), covering the resale of all of the Registrable Securities; provided, that if the
SEC refuses to declare the Registration Statement filed pursuant to this Section
2(a) effective as a valid secondary offering under Rule 415 due to the number of
Registrable Shares included in such Registration Statement relative to the
number of outstanding shares of Common Stock, then (i) the Company shall be
permitted to reduce the number of Registrable Shares included in such
Registration Statement to an amount that does not exceed the amount that the SEC
allows for the offering thereunder to qualify as a valid secondary offering
under Rule 415, and (ii) the Company shall file, as soon as practicable
thereafter and in accordance with the Act and the SEC’s rules and regulations, a
Registration Statement (or Registration Statement(s) if required by the SEC) to
register the Registrable Securities excluded from the initial Registration
Statement filed hereunder, provided that the terms of Sections 2(b) through 2(i)
below shall apply to such Registration Statement or Registration Statements once
the filing thereof is permitted.
(b) The
Company shall use its commercially reasonable efforts to cause the Registration
Statement(s) required by this Section 2 to be declared effective under the Act
as promptly as possible after the filing thereof, but in any event not later
than one hundred eighty (180) days after the date of completion of the audit of
the financial statements of the Acquired Company (or, in the case of any
additional Registration statements required under Section 2a above, the later
filing date therefor permitted in accordance with Section 2(a)
above).
(c) If
(i) any Registration Statement required by this Section 2 is not declared
effective on or prior to the required effective date in accordance with Section
2(b) above, or (ii) any Registration Statement required by this
Section 2 shall cease to be available for use by the Holders as selling
stockholders (A) as provided under Section 2(f) below where such
unavailability continues for a period in excess of five (5) days beyond the
allowed time period, or (B) for any other reason including, without
limitation, by reason of a stop order, a material misstatement or omission in
such Registration Statement or the information contained in such Registration
Statement having become outdated and continues to be unavailable for a period in
excess of thirty (30) days (which need not be consecutive days) in any twelve
(12) month period, then the Company shall pay to the Holders, ratably in
proportion to the number of Registrable Shares held by the respective Holders, a
cash fee equal to the product of $500 multiplied by the number of calendar days
during which any of the events described in clauses (i) or (ii) above occurs and
is continuing (the “Blackout Period”);
provided, however, that the
aggregate such fees payable under this Section 2(c) shall not exceed
$500,000. Each such payment shall be due within five (5) days after
the end of each 30-day period of the Blackout Period until the termination of
the Blackout Period and within five (5) days after such
termination. The Blackout Period shall terminate upon the
effectiveness of the Registration Statement in the case of clause (i) above and
upon true notice from the Company that the Registration Statement is again
available in the case of clause (ii) above.
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(d) The
Company shall use its commercially reasonable efforts to keep each Registration
Statement under this Section 2 effective at all times during the applicable
Registration Period.
(e) If any
offering pursuant to a Registration Statement pursuant to this Section 2
involves an underwritten offering (which may only be with the consent of the
Company, which shall not be unreasonably withheld or delayed), the Holders
(acting by a majority in interest) shall have the right to select an investment
banker or bankers and manager or managers to administer to the offering, which
investment banker or bankers or manager or managers shall be reasonably
satisfactory to the Company.
(f) If the
Registrable Securities are registered for resale under an effective Registration
Statement, the Holders shall cease any distribution of such Shares under such
Registration Statement:
(i) for a
period of up to six (6) months if (A) such distribution would require the public
disclosure of material non-public information concerning any transaction or
negotiations involving the Company or any of its Affiliates that, in the
reasonable judgment of the Company’s Board of Directors, would materially
interfere with such transaction or negotiations, or (B) such distribution would
otherwise require premature disclosure of information that, in the reasonable
judgment of the Company’s Board of Directors, would adversely affect or
otherwise be detrimental to the Company; provided that the
Company shall not invoke this clause (i) more than once in any twelve (12) month
period or for more than six (6) months in any such twelve (12) month
period;
(ii) not more
than once in any twelve (12) month period, for up to 30 days, upon the request
of the Company if the Company proposes to file a Registration Statement under
the Act for the offering and sale of securities for its own account in an
underwritten offering and the managing underwriter therefor shall advise the
Company in writing that in its opinion the continued distribution of the
Registrable Securities would adversely affect the offering of the securities
proposed to be registered for the account of the Company; and
(iii) for
a period of up to sixty (60) days after the filing of the Company’s annual
report on Form 10-K or other event that requires the filing of a post-effective
amendment to any Registration Statement hereunder, so long as the Company has
filed and is during such period actively pursuing effectiveness of such
post-effective amendment with the staff of the SEC.
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The
Company shall promptly notify the Holders in writing at such time as (x) such
transactions or negotiations have been otherwise publicly disclosed or
terminated, or (y) such non-public information has been publicly disclosed or
counsel to the Company has determined that such disclosure is not required due
to subsequent events.
(g) The
Company shall (i) permit the Holders’ counsel to review (A) such
Registration Statement, and all amendments and supplements thereto, in each case
to the extent of any information with respect to the Holders, their and their
Affiliates’ beneficial ownership of securities of the Company, and their
intended method of disposition of Registrable Securities, and (B) all requests
for acceleration or effectiveness thereof and any correspondence between the
Company and the SEC relating to the Registration Statement (collectively, the
“Registration
Documents”), for a reasonable period of time prior to their filing with
the SEC, (ii) not file (or send) any Registration Documents in a form to
which such counsel reasonably objects, and (iii) not request acceleration of
such Registration Statement without prior written notice to such
counsel. The sections of such Registration Statement covering
information with respect to the Holders, their and their Affiliates’ beneficial
ownership of securities of the Company, and their intended method of disposition
of Registrable Securities shall conform to the information provided to the
Company by the Holders.
(h) The
Registration Statement pursuant to this Section 2 shall not include any
securities other than Registrable Shares.
(i) The
Company shall bear all of the Costs and Expenses of the Registration pursuant to
this Section 2.
3.
Piggyback
Registration. In
the event that the Company shall propose a Registration at any time when a
Registration Statement(s) covering all Registrable Shares is not effective
pursuant to Section 2 above, then the Company shall give to each Holder written
notice (the “Registration Notice”)
of such proposed Registration (which notice shall include a statement of the
proposed filing date thereof, the underwriters and/or managing underwriters of
the subject offering, and any other known material information relating to the
proposed Registration) not less than twenty (20) or more than sixty (60) days
prior to the filing of the subject Registration Statement, and shall, subject to
the limitations provided in this Section 3, include in such Registration
Statement all or a portion of the Registrable Shares owned by and/or issuable to
each Holder, as and to the extent that such Holder may request same to be so
included by means of written notice given to the Company within ten (10) days
after the Company’s giving of the Registration Notice. Each Holder
shall be permitted to withdraw all or any part of its Registrable Shares from a
Registration Statement by written notice to the Company given at any time prior
to the effective date of the Registration Statement. The Company
shall bear all of the Costs and Expenses of any Registration described in this
Section 3; provided, however, that each
Holder shall pay, pro rata based upon the
number of its Registrable Shares included therein, the underwriters’ discounts,
commissions and compensation attributable solely to the inclusion of such
Registrable Shares in the overall public offering. Notwithstanding anything to
the contrary contained herein, the Company’s obligation to include a Holder’s
Registrable Shares in any such Registration Statement shall be subject, at the
option of the Company, to the following further conditions:
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(a) The
distribution for the account of such Holder shall be underwritten by the same
underwriters (if any) who are underwriting the distribution of the securities
for the account of the Company and/or any other persons whose securities are
covered by such Registration Statement, and shall be made at the same
underwriter discount or commission applicable to the distribution of the
securities for the account of the Company and/or any other persons whose
securities are covered by such Registration Statement; and such Holder shall
enter into an agreement with such underwriters containing customary
indemnification and other provisions;
(b) If at any
time after giving the Registration Notice, and prior to the effective date of
the Registration Statement filed in connection with such Registration Notice,
the Company shall determine for any reason not to proceed with the subject
Registration, the Company may, at its election, give written notice of such
determination to the Holders and, thereupon, shall be relieved of its obligation
to register any of the Holders’ Registrable Shares in connection with such
Registration;
(c) In
connection with an underwritten public offering pursuant to a Registration
Statement under this Section 3, if and only if the managing underwriter(s)
thereof shall advise the Company in writing that, due to adverse market
conditions or the potential adverse impact on the offering to be made for the
account of the Company, the securities to be included in such Registration will
not include all of the Registrable Shares requested to be so included by the
Holders, then the Company will promptly furnish each such Holder with a copy of
such written statement and may require, by written notice to each such Holder
accompanying such written statement, that the distribution of all or a specified
portion of such Registrable Shares be excluded from such distribution (with any
such “cutback” to be allocated among the subject Holders (and, if applicable,
any other holders of Common Stock to be included in such Registration) in
proportion to the relative number of shares of Common Stock requested by such
Persons to be included in such Registration); and
(d) The
Company shall not be obligated to effect any registration of Shares incidental
to the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option or
other employee benefit plans.
4.
Registration
Procedures. In
the case of each Registration effected by the Company in which Registrable
Shares are to be sold for the account of any Holder, the Company, at its sole
cost and expense (exclusive of items excluded in the proviso to the definition
of “Costs and Expenses” above), will use its commercially reasonable efforts
to:
(a) prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Registration Statement, until the completion
of the distribution of the Registrable Shares included therein, as may be
required by the applicable rules and regulations of the SEC and the instructions
applicable to the form of such Registration Statement, and furnish to the
Holders of the Registrable Shares covered thereby copies of any such supplement
or amendment not less than three Business Days prior to the date first used
and/or filed with the SEC; and comply with the provisions of the Act with
respect to the disposition of all the Shares to be included in such Registration
Statement;
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(b) provide
(i) the Holders of the Registrable Shares to be included in such Registration
Statement, (ii) the underwriters (which term, for purposes of this Agreement,
shall include a person deemed to be an underwriter within the meaning of Section
2(11) of the Act, if any, thereof, (iii) the sales or placement agent, if any,
therefor, (iv) one counsel for such underwriters or agent, and (v) not more than
one counsel for all the Holders of such Registrable Shares, the reasonable
opportunity to review such Registration Statement, each prospectus included
therein or filed with the SEC, and each amendment or supplement thereto, in each
case to the extent of any disclosures regarding the Holders, their and their
Affiliates’ beneficial ownership of securities of the Company, and their
intended method of disposition of the Registrable Shares included in such
Registration Statement (or any amendment to any such information previously
included in such Registration Statement (including any amendment or supplement
thereto) or any prospectus included therein);
(c) for a
reasonable period prior to the filing of such Registration Statement, and not
more than once in any calendar quarter throughout the period specified above,
make available for inspection by the Persons referred to in Section 4(b) above
such financial and other information and books and records of the Company, and
cause the officers, directors, employees, counsel and independent certified
public accountants of the Company to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel referred to in
such Section 4(b), to conduct a reasonable investigation within the meaning of
the Act; provided, however, that each
such party shall be required to maintain in confidence and not disclose to any
other person or entity any information or records reasonably designated by the
Company in writing as being confidential, until such time as and to the extent
that (i) such information becomes a matter of public record or generally
available to the public (whether by virtue of its inclusion in such Registration
Statement or otherwise, other than by reason of a breach hereof), (ii) such
party shall be required to disclose such information pursuant to the subpoena or
order of any court or other governmental agency or body having jurisdiction over
the matter, or (iii) such information is required to be set forth in such
Registration Statement or the prospectus included therein or in an amendment to
such Registration Statement or an amendment or supplement to such prospectus in
order that such Registration Statement, prospectus, amendment or supplement, as
the case may be, does not include an untrue statement of a material fact or omit
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and further provided,
that the Company need not make such information available, nor need it cause any
officer, director or employee to respond to such inquiry, unless each such
Holder of Registrable Shares to be included in a Registration Statement
hereunder, upon the Company’s request, executes and delivers to the Company a
specific undertaking to substantially the same effect contained in the preceding
proviso;
(d) promptly
notify in writing the Holders of Registrable Shares to be included in a
Registration Statement hereunder, the sales or placement agent, if any, therefor
and the managing underwriter of the securities being sold, (i) when such
Registration Statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment, when the
same has become effective, (ii) of any comments by the SEC and by the blue sky
or securities commission or regulator of any state with respect thereto or any
request by the SEC for amendments or supplements to such Registration Statement
or the prospectus or for additional information, (iii) of the issuance by the
SEC of any stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of any Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (v) if it shall be the case,
at any time when a prospectus is required to be delivered under the Act, that
such Registration Statement, prospectus, or any document incorporated by
reference in any of the foregoing contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
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(e) obtain
the withdrawal of any order suspending the effectiveness of such Registration
Statement or any post-effective amendment thereto at the earliest practicable
date;
(f) if
requested by any managing underwriter or underwriter, any placement or sales
agent or any Holder of Registrable Shares to be included in a Registration
Statement, promptly incorporate in a prospectus, prospectus supplement or
post-effective amendment such information as is required by the applicable rules
and regulations of the SEC and as such managing underwriter or underwriters,
such agent or such Holder may reasonably specify should be included therein
relating to the terms of the sale of the Registrable Shares included thereunder,
including, without limitation, information with respect to the number of
Registrable Shares being sold by such Holder or agent or to such underwriters,
the name and description of such Holder, the offering price of such Registrable
Shares and any discount, commission or other compensation payable in respect
thereof, the purchase price being paid therefor by such underwriters and with
respect to any other terms of the offering of the Registrable Shares to be sold
in such offering; and make all required filings of such prospectus, prospectus
supplement or post-effective amendment promptly after notification of the
matters to be incorporated in such prospectus, prospectus supplement or
post-effective amendment;
(g) furnish
to each Holder of Registrable Shares to be included in such Registration
Statement hereunder, each placement or sales agent, if any, therefor, each
underwriter, if any, thereof and the counsel referred to in Section 4(b) an
executed copy of such Registration Statement, each such amendment and supplement
thereto (in each case excluding all exhibits and documents incorporated by
reference) and such number of copies of the Registration Statement (excluding
exhibits thereto and documents incorporated by reference therein unless
specifically so requested by such Holder, agent or underwriter, as the case may
be) and the prospectus included in such Registration Statement (including each
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Act, as such Holder, agent, if any, and underwriter, if any,
may reasonably request in order to facilitate the disposition of the Shares
owned by such Holder, sold by such agent or underwritten by such underwriter and
to permit such Holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Act; and the Company hereby consents to the use of such
prospectus and any amendment or supplement thereto by each such Holder and by
any such agent and underwriter, in each case in the form most recently provided
to such person by the Company, in connection with the offering and sale of the
Shares covered by the prospectus (including such preliminary and summary
prospectus) or any supplement or amendment thereto;
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(h) timely
(i) register or qualify (to the extent legally required) the Shares to be
included in such registration statement under such other securities laws or blue
sky laws of such jurisdictions to be designated by the Holders of a majority of
such Shares participating in such registration and each placement or sales
agent, if any, therefor and underwriter, if any, thereof, as any Holder and each
underwriter, if any, of the securities being sold shall reasonably request, (ii)
keep such registrations or qualifications in effect and comply with such laws so
as to permit the continuance of offers, sales and dealings therein in such
jurisdictions for so long as may be necessary to enable such Holder, agent or
underwriter to complete its distribution of the Registrable Shares pursuant to
such Registration Statement, and (iii) take any and all such actions as may be
reasonably necessary or advisable to enable such Holder, agent, if any, and
underwriter to consummate the disposition in such jurisdictions of such Shares;
provided, however, that the
Company shall not be required for any such purpose to (A) qualify generally to
do business as a foreign corporation or a broker-dealer in any jurisdiction
wherein it would not otherwise be required to qualify but for the requirements
of this Section 4(h), (B) subject itself to taxation in any such jurisdiction,
or (C) consent to general service of process in any such
jurisdiction;
(i) cooperate
with the Holders of the Registrable Shares to be included in a Registration
Statement hereunder and the managing underwriter(s) to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold, which certificates shall be printed, lithographed or engraved, or produced
by any combination of such methods, in customary form to permit the transfer
thereof through the Company’s transfer agent; and enable such Registrable Shares
to be in such denominations and registered in such names as the managing
underwriter(s) may request at least two (2) business days prior to any sale of
the Registrable Shares;
(j) provide a
CUSIP number for all Shares, and cause the Shares to be accepted for trading or
listing on the principal securities exchange or trading medium on which shares
of that class of the Company are traded or listed, in each case not later than
the effective date of the Registration Statement;
(k) in the
event that Registrable Securities included in any Registration Statement are to
be sold to or through any underwriter or placement or sales agent, (i) make such
representations and warranties to the Holders of such Registrable Shares and the
placement or sales agent, if any, therefor and the underwriters, if any, thereof
in form, substance and scope as are customarily made in connection with any
offering of equity securities pursuant to any appropriate agreement and/or in a
registration statement filed on the form applicable to such Registration
Statement; (ii) if so requested by any such underwriter or placement or sales
agent, obtain an opinion of counsel to the Company in customary form and
covering such matters, of the type customarily covered by such an opinion, as
the managing underwriters, if any, and/or the placement or sales agent may
reasonably request, addressed to such Holders and the placement or sales agent,
if any, therefor and the underwriters, if any, thereof and dated the effective
date of such Registration Statement (and if such Registration Statement
contemplates an underwritten offering of a part or of all of the Shares included
in such Registration Statement, dated the date of the closing under the
underwriting agreement relating thereto); (iii) if so requested by any such
underwriter or placement or sales agent, obtain a “cold comfort” letter or
letters from the independent certified public accountants of the Company
addressed to the Holders and the placement or sales agent, if any, therefor and
the underwriters, if any, thereof, dated (A) the effective date of such
Registration Statement, and (B) the effective date of the most recent (or, if so
stated in the request therefor, the next) prospectus supplement to the
prospectus included in such
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Registration
Statement or post-effective amendment to such Registration Statement which
includes unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such prospectus
(and, if such Registration Statement contemplates an underwritten offering
pursuant to any prospectus supplement to the prospectus included in such
Registration Statement or post-effective amendment to such Registration
Statement which includes unaudited or audited financial statements as of a date
or for a period subsequent to that of the latest such statements included in
such prospectus, dated the date of the closing under the underwriting agreement
relating thereto), such letter or letters to be in customary form and covering
such matters of the type customarily covered by letters of such type; (iv)
deliver such documents and certificates, including officers’ certificates, as
may be customary and reasonably requested by Holders of at least a majority of
the Registrable Shares being sold and the placement or sales agent, if any,
therefor and the managing underwriters, if any, thereof to evidence the accuracy
of the representations and warranties made pursuant to clause (i) above and the
compliance with or satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the Company; and (v)
undertake such obligations relating to expense reimbursement, indemnification
and contribution as are provided in Sections 2, 3 and 5 hereof;
(l) notify in
writing each Holder of Registrable Shares of any proposal by the Company to
amend or waive any provision of this Agreement and of any amendment or waiver
effected pursuant thereto, each of which notices shall contain the text of the
amendment or waiver proposed or effected, as the case may be;
(m) engage to
act on behalf of the Company, with respect to the Registrable Shares to be so
registered, a registrar and transfer agent having such duties and
responsibilities (including, without limitation, registration of transfers and
maintenance of stock registers) as are customarily discharged by such an agent,
and to enter into such agreements and to offer such indemnities as are customary
in respect thereof; and
(n) otherwise
comply with all applicable rules and regulations of the SEC, and make available
to the Holders, as soon as practicable, but in any event not later than 18
months after the effective date of such Registration Statement, an earnings
statement covering a period of at least twelve months which shall satisfy the
provisions of Section 6(a) of the Act (including pursuant to Rule 158
thereunder).
5.
Indemnification by the
Company.
(a) The
Company shall indemnify each Holder and its Affiliates from and against any
claim, loss, cost, charge or liability of any kind, including amounts paid in
settlement and reasonable attorneys’ fees, which may be incurred by the Holder
or Affiliate as a result of any breach of any representation or warranty or
covenant of the Company contained in this Agreement or in any certificate
delivered on the closing date of any public offering of Shares.
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(b) The
Company shall indemnify and hold harmless each Holder and its Affiliates, any
underwriter (as defined in the Act) for any Holder, each officer and director of
a Holder, legal counsel and accountants for a Holder, and each person, if any,
who controls a Holder or such underwriter within the meaning of the Act, against
any losses, expenses, claims, damages or liabilities, joint or several, to which
such Holder or any such Affiliate, underwriter, officer, director or controlling
person becomes subject, under the Act or any rule or regulation thereunder or
otherwise, insofar as such losses, expenses, claims, damages or liabilities (or
actions in respect thereof) (i) are caused by any untrue statement or alleged
untrue statement of any material fact contained in any preliminary prospectus
(if used prior to the effective date of the Registration Statement), or
contained, on the effective date thereof, in any Registration Statement in which
Registrable Shares were included, the prospectus contained therein, any
amendment or supplement thereto, or any other document related to such
Registration Statement, or (ii) arise out of or are based upon the 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 (iii) arise out
of any violation by the Company of the Act or any rule or regulation thereunder
applicable to the Company and relating to actions or omissions otherwise
required of the Company in connection with such registration. The
Company shall reimburse each Holder and any such Affiliate, underwriter,
officer, director or controlling person for any legal or other expenses
reasonably incurred by such Holder, or any such officer, director, underwriter
or controlling person in connection with investigating, defending or
settling any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable to any such persons in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished to
the Company in writing by such Person expressly for inclusion in any of the
foregoing documents. This indemnity shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld or delayed.
6.
Further Obligations of
Holders. The
obligations of the Company with respect to any particular Holder are subject to
such Holder’s agreement to the following (which such Holder shall specifically
confirm in writing to the Company upon the Company’s request in connection with
any Registration Statement):
(a) Such
Holder shall furnish in writing to the Company all information concerning such
Holder and its and its Affiliates’ holdings of securities of the Company and its
Affiliates, and the intended method of disposition of the Registrable Securities
included in such Registration Statement, as shall be reasonably required in
connection with the preparation and filing of any Registration Statement
covering any of such Holder’s Registrable Shares.
(b) Such
Holder shall indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed a Registration Statement, each person (if
any) who controls the Company within the meaning of the Act, and any underwriter
(as defined in the Act) for the Company, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, controlling
person or underwriter may become subject under the Act or any rule or regulation
thereunder or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) (i) are caused by any untrue statement or
alleged untrue statement of any material fact contained in any preliminary
prospectus (if used prior to the effective date of the Registration Statement),
or contained, on the effective date thereof, in any Registration Statement in
which such Holder’s Registrable Shares were included, the prospectus contained
therein, any amendment or supplement thereto, or any other document related to
such Registration Statement, or (ii) arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with information furnished to the Company by such Holder in
writing expressly for inclusion in any of the foregoing documents. In
no event shall any Holder be required to pay indemnification hereunder (or
contribution under Section 7(d) below) in an aggregate amount in excess of the
net proceeds received by such Holder in the subject offering. This
indemnity shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the subject Holder, which consent shall not be unreasonably withheld or
delayed.
7.
Additional
Provisions.
(a) Each
Holder and each other Person indemnified pursuant to Section 5 above shall, in
the event that it receives notice of the commencement of any action against it
which is based upon an alleged act or omission which, if proven, would result in
the Company’s having to indemnify it pursuant to Section 5 above, promptly
notify the Company, in writing, of the commencement of such action and permit
the Company, if the Company so notifies such Holder within twenty (20) days
after receipt by the Company of notice of the commencement of the action, to
participate in and to assume the defense of such action with counsel reasonably
satisfactory to such Holder; provided, however, that such
Holder or other indemnified person shall be entitled to retain its own counsel
at its own expense (except that the indemnifying party shall bear the expense of
such separate counsel if representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of
interest). The failure to notify the Company promptly of the
commencement of any such action shall not relieve the Company of any liability
to indemnify such Holder or such other indemnified person, as the case may be,
under Section 5 above, except to the extent that the Company shall be actually
prejudiced or shall suffer any loss by reason of such failure to give notice,
and shall not relieve the Company of any other liabilities which it may have
under this or any other agreement.
(b) The
Company and each other Person indemnified pursuant to Section 6 above shall, in
the event that it receives notice of the commencement of any action against it
which is based upon an alleged act or omission which, if proven, would result in
any Holder having to indemnify it pursuant to Section 6 above, promptly notify
such Holder, in writing, of the commencement of such action and permit such
Holder, if such Holder so notifies the Company within twenty (20) days after
receipt by such Holder of notice of the commencement of the action, to
participate in and to assume the defense of such action with counsel reasonably
satisfactory to the Company; provided, however, that the
Company or other indemnified person shall be entitled to retain its own counsel
at the Company’s expense. The failure to notify any Holder promptly
of the commencement of any such action shall not relieve such Holder of
liability to indemnify the Company or such other indemnified person, as the case
may be, under Section 6 above, except to the extent that the subject Holder
shall be actually prejudiced or shall suffer any loss by reason of such failure
to give notice, and shall not relieve such Holder of any other liabilities which
it may have under this Agreement or any other agreement.
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(c) No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified person who is party to such claim or
litigation, 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 person of a release from all liability in respect
to such claim or litigation. Each such indemnified person shall
furnish such information regarding itself or the claim in question as an
indemnifying party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
(d) If the
indemnification provided for in Section 5 and 6 is unavailable or insufficient
to hold harmless an indemnified party, then, subject to the limits set forth in
Section 6(b) above, each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the expenses, claims,
losses, damages or liabilities (or actions or proceedings in respect thereof)
referred to in Section 5 and 6, in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the sellers of Shares on
the other hand in connection with statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses, as well as any other relevant equitable
considerations. The relative fault 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 the
sellers of Shares and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Holders agree that it would not be just
and equitable if contributions pursuant to this Section 7(d) were to be
determined by pro rata allocation (even if all sellers of Shares were
treated as one entity for such purpose) or by another method of allocation which
does not take account of the equitable considerations referred to in the first
sentence of this Section. The amount paid by an indemnified person as
a result of the expenses, claims, losses, damages or liabilities (or actions or
proceedings in respect thereof) referred to in the first sentence of this
Section 7(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified person in connection with investigating or
defending any claim, action or proceeding which is the subject of this Section
7(d). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
obligations of sellers of Shares to contribute pursuant to this Section 7(d)
shall be several in proportion to the respective amounts of Shares sold by them
pursuant to a Registration Statement.
8. Rule 144
Information. For
so long as the Company shall be a reporting company under the Exchange Act, the
Company will at all times keep publicly available adequate current public
information with respect to the Company of the type and in the manner specified
in Rule 144 promulgated under the Act.
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9. Limitations on Subsequent
Registration Rights. The
Company is not party to or bound by, and the Company shall not, without the
prior written consent of the Holders of a majority of the Registrable Shares
then outstanding and/or issuable, hereafter enter into, any agreement with any
holder or prospective holder of any securities of the Company which would
require the Company to include such securities in any Registration filed under
Section 2 above.
10. Notices. All
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be given by personal delivery, by
telecopier (with confirmation of receipt), by recognized overnight courier
service (with all charges prepaid or billed to the account of the sender), or by
certified or registered mail, return receipt requested, and with postage
prepaid, addressed (a) if to the Company, at its office at 0000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx, Telecopier:
(000) 000-0000, or such other address or telecopier number as shall have been
specified by the Company to the Holders by written notice, or (b) if to any
Holder, at his, her or its address or telecopier number as same appears on the
records of the Company. All notices shall be deemed to have been
given either at the time of the delivery or telecopy (with confirmation of
receipt) thereof, or, if sent by overnight courier, on the next business day
following delivery thereof to the overnight courier service, or, if mailed, at
the completion of the third business day following the time of such
mailing.
11.
Waiver and
Amendment. No
waiver, amendment or modification of this Agreement or of any provision hereof
shall be valid unless evidenced by a writing duly executed by the Company and
Holders holding, in the aggregate, a majority of the Registrable Shares then
outstanding and/or issuable. No waiver of any default hereunder shall
be deemed a waiver of any other, prior or subsequent default
hereunder.
12.
Governing
Law. This
Agreement shall (irrespective of the place where it is executed and delivered)
be governed, construed and controlled by and under the substantive laws of the
State of New York, without regard to conflicts of law principles (other than
Sections 5-1401 and 5-1402 of the New York General Obligations Law)
13.
Binding
Effect. This
Agreement shall be binding upon and shall inure to benefit of the Company and
the Holders and their respective successors in interest from time to
time.
14.
Captions. The
captions and Section headings used in this Agreement are for convenience only,
and shall not affect the construction or interpretation of this Agreement or any
of the provisions hereof.
15.
Gender. All
pronouns used in this Agreement in the masculine, feminine or neuter gender
shall, as the context may allow, also refer to each other gender.
16.
Entire
Agreement. This
Agreement constitutes the sole and entire agreement and understanding between
the parties hereto as to the subject matter hereof, and supersedes all prior
discussions, agreements and understandings of every kind and nature between them
as to such subject matter.
17.
Reliance and
Benefit. This
Agreement is intended to benefit, and may be relied upon by, all Holders from
time to time, as if such Holders were expressly named herein, party hereto and
signatory hereon.
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IN WITNESS WHEREOF, the
Company has executed this Agreement as of the date first set forth
above.
| GENERAL ENVIRONMENTAL MANAGEMENT, INC., a Nevada corporation | ||||
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By:
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|
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Xxxxxxx
X. Xxxxxx
Chief
Executive Officer
|
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