EXHIBIT 7.0
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of December
17, 1997, is by and between Environmental Safeguards, Inc., a Nevada corporation
("Company"), and * (the "Holder").
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W I T N E S E T H:
- - - - - - - - -
WHEREAS, the Company has entered into a Purchase Agreement dated December
17, 1997 (the "Purchase Agreement"), pursuant to which it has offered and sold
shares of its Series B Convertible Preferred Stock (the "Preferred Stock") to
certain participants thereto; and
WHEREAS, the Company has sold shares of its Preferred Stock to the Holder
pursuant to the Purchase Agreement; and
WHEREAS, the shares of Preferred Stock purchased by Holder are convertible
into shares of the Company's common stock, $0.001 par value per share ("Common
Stock"); and
WHEREAS, in connection with Holder's purchase of the Preferred Stock, the
Company agreed to grant certain registration rights in respect of the shares of
Common Stock underlying the Preferred Stock (the "Shares").
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 is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE ONE
REGISTRATION RIGHTS
Section 1.1 Registration Rights Available. The Company agrees to provide
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Holder and its transferees or distributees (collectively the "Holders") with the
following registration rights with respect to the Shares and any other
securities issued or issuable at any time or from time to time in respect of the
Shares upon a stock split, stock dividend, recapitalization or other similar
event involving the Company (collectively, the "Registered Shares") (a) two
rights to demand registration in a secondary offering by means of shelf
registration under Rule 415 of the Securities Act of 1933, as amended (the
"Act"), and (b) "piggyback" registration in a firm commitment underwritten
offering of Company securities, all subject to the rights and limitations of the
provisions of this Agreement (the rights to two demand and unlimited piggyback
registrations granted hereunder are referred to herein as "Registration
Rights").
Section 1.2 Demand Registration.
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(a) Subject to the restrictions of Section 1.2(b) below, upon the written
request of at least a majority of the Holders of the Preferred Stock requesting
that the Company effect a registration under the Act and specifying the intended
method of distribution thereof, the Company shall promptly use its best efforts
to file with the Securities and Exchange Commission
(the "Commission") and cause to become effective as soon as practicable
thereafter, a Registration Statement on an appropriate form relating to the
offer and sale of the Registered Shares by the Holders. The Company shall
promptly give written notice of such requested registration to all Holders of
record of shares of Preferred Stock which were purchased in connection with the
Purchase Agreement. The Registration Statement will include the Registered
Shares, all other shares for which written notice was given by the Company which
are requested to be included by the Holders thereof by written notice to the
Company within 15 days of the giving of written notice by the Company and may
include shares of common stock other than the foregoing, either for the
Company's account or for the account of other selling shareholders. The Company
shall not be obligated to effect more than two registrations on behalf of the
Holders under this Section 1.2.
(b) The Company shall not be required to file any registration statement
pursuant to Section 1.1(a): (i) when the Company is engaged in discussions with
an underwriter concerning a contemplated underwritten public offering of its
securities and the managing underwriter thereof has advised Holders in writing
that such filing would have a material adverse effect on the contemplated
offering; (ii) if the Company is engaged in negotiations in respect of an
acquisition or financing transaction and, in the good faith judgment of the
Board of Directors such transaction would be adversely affected by the filing of
the Registration Statement, provided clause (i) and (ii) shall not delay the
Company's obligations under this Section beyond 90 days after completion of the
contemplated offering or financing or notice of cancellation of such
contemplated offering or financing; or (iii) if the Company is in the possession
of material nonpublic information the disclosure of which, in the good faith
judgment of the Company's board of directors, would materially adversely affect
or materially interfere with its business; provided, however, that if the
Company's obligation to file a registration statement under this Section is
tolled by reason of one of the preceding clauses (i) - (iii) and a registration
request is made hereunder during such time, the Company shall promptly notify
Holder when the Company is able to file a registration statement without
conflicting with clauses (i) - (iii) above.
Section 1.3 Piggyback Registration. With respect to Holders rights to
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piggyback registration in a firm commitment underwriting of the Company
securities pursuant to Section 1.1 (b), the parties agree as follows:
(a) Pursuant to Section 1.1(b), the Company will (i) promptly give to
Holders written notice of any registration relating to a firm commitment public
offering of the Company's securities; and (ii) include in such registration, and
in the underwriting involved therein, all the Registered Shares specified in
Holders written request delivered in accordance with Section 6.1 herein within
15 days after the date of such written notice from the Company.
(b) The right of the Holders to registration pursuant to Section 1.1(b)
shall be conditioned upon Holders participation in such underwriting, and the
inclusion of the Registered Shares in the underwriting shall be limited to the
extent provided herein. The Holders proposing to distribute its securities
through such underwriting shall enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company.
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Notwithstanding any other provision of this Agreement, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit some or all of
the Registered Shares that may be included in the registration and underwriting
provided, however, the Holders shall have priority rights to piggy-back
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registration over any and all other persons. If Holder disapproves of the terms
of any such underwriting, it may elect to withdraw therefrom by written notice
to the Company and the managing underwriter, delivered not less than seven days
before the effective date. Any Registered Shares excluded or withdrawn from such
underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 90 days after the effective date
of the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
Section 1.4 Exception to Registration. The Company shall not be required
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to effect a registration under this Article One if (i) in the written opinion of
counsel for the Company, which counsel and the opinion so rendered shall be
reasonably acceptable to Holders, such Holders may sell without registration
under the Act all Registered Shares which it requested registration under the
provisions of the Act and in the manner and in the quantity in which the
Registered Shares were proposed to be sold, or (ii) the Company shall have
obtained from the Commission a "no-action" letter to that effect.
ARTICLE TWO
REGISTRATION PROCEDURES
Section 2.1 Registration Obligations. In performing its obligations under
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Article One to register the Registered Shares, Company will, subject to the
limitations provided herein, as expeditiously as possible:
(a) prepare and file with the Commission the Registration Statement and use
its best efforts to cause such registration to become and remain effective for
the term specified herein;
(b) prepare and file with the Commission such amendments and supplements to
the Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep the Registration Statement effective in accordance with
the terms of this Agreement and to comply with the provisions of the Act with
respect to the disposition of all Registered Shares covered by the Registration
Statement;
(c) furnish to the Holder one conformed copy of the Registration Statement
and of each such amendment and supplement thereto (in each case including all
exhibits), one copy of the Prospectus (including each preliminary prospectus and
any summary prospectus) and any other Prospectus filed under Rule 424 under the
Act, and such other documents, as the Holder may reasonably request;
(d) use its best efforts to (i) register or qualify the Registered Shares
under such other securities or blue sky laws of such jurisdictions as the Holder
shall reasonably request, (ii) keep
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such registration or qualification in effect for so long as the Registration
Statement remains in effect, and (iii) take any other action which may be
reasonably necessary or advisable to enable the Holder to consummate the
disposition of the Registered Shares in such jurisdictions, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not but
for the requirements of this Section 2.1(d) be obligated to be so qualified, to
consent to general service of process in any such jurisdiction, or to take any
such action which would impose unreasonable expense on the Company;
(e) notify the Holders at any time when a Prospectus relating to the Shares
is required to be delivered under the Act, upon discovery that, or upon the
happening of any event as a result of which, the Prospectus included in the
Registration Statement, as then in effect, includes 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 the light of the
circumstances under which they were made, and prepare and furnish to the Holders
one copy of a supplement to or an amendment of such Prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such Prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
(f) provide and cause to be maintained a transfer agent for the Common Stock
from and after a date not later than the effective date of the Registration
Statement;
(g) properly notify any securities exchange on which any of the Company's
Common Stock is listed of the registration of any of the Registered Shares, and
use its best efforts to satisfy all prerequisites and regulations of any such
exchange relating to the trading of such Registered Shares on such exchange; and
(h) make available for inspection by the Holders, and any one attorney,
accountant or other agent retained by the Holders of Registered Shares, as a
group, (the "Inspector"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with such registration statement; provided that records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspector are confidential shall not be disclosed by the Inspector unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the Registration Statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction; provided, further, the Holders agree that they will, upon learning
that disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company, at its expense, to undertake
appropriate action and to prevent disclosure of the Records deemed confidential.
Section 2.2 Registration Obligations of Holder. As a condition to the
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Company performing
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its obligations under Article One to register the Registered Shares, the Holder
will, as expeditiously as possible:
(a) furnish the Company in writing such information regarding the Holder, the
Registered Shares and other securities of the Company held by the Holder, and
the distribution of such Registered Shares as the Company may from time to time
reasonably request in writing. If the Holder refuses to provide the Company
with any of such information on the grounds that it is not necessary to include
such information in the Registration Statement, the Company may exclude the
Holder's Registered Shares from the Registration Statement if the Company
provides the Holder with an opinion of counsel to the effect that such
information must be included in the Registration Statement and the Holder
thereafter continues to withhold such information.
(b) agree to promptly notify the Company as and when any Registered Shares
are sold and when the Holder elects to terminate all further offers and sales of
Shares pursuant to the Registration Statement.
(c) upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 2.1(e), the Holder will forthwith discontinue
the Holder's disposition of the Registered Shares pursuant to the Registration
Statement until the Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 2.1(e) and, if so directed by the
Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
current Prospectus at the time of receipt of such notice.
Section 2.3 Expenses. All expenses incident to the Company's performance of
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its obligations under this Agreement, including without limitation, all
registration and filing fees, fees and expenses of compliance with securities
and Blue Sky laws, printing expenses, fees and disbursements of the Company's
counsel, independent certified public accountants, and other persons retained by
the Company (all such expenses being herein called "Registration Expenses") will
be borne by the Company. The Holders shall be responsible for all selling fees,
expenses, discounts and commissions relating to the Registered Shares and for
the fees and expenses of counsel and other persons engaged by the Holders (as
well as any costs for any interim audit if requested by the Holder pursuant to
Section 1.2(b)).
ARTICLE THREE
REPORTING REQUIREMENTS
With a view to making available to the Holders the benefits of certain rules
and regulations of the Commission which may at any time permit the sale of the
Registered Shares to the public without registration, the Company agrees to use
its best efforts to (i) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Act and (ii) file with
the Commission in a timely manner all reports and other documents required of
the Company under the Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"); and (iii) take such further action as any Holder may
reasonably request, to the extent
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required from time to time to enable such Holder to sell the Registered Shares
without registration under the Act pursuant to the exemptions provided by Rule
144 or any similar rule or regulation adopted by the Commission.
ARTICLE FOUR
LIMITATIONS ON REGISTRATION RIGHTS TO OTHER PARTIES
From and after the date of this Agreement, the Company shall not enter into
any agreement with any holder or prospective holder of any securities of the
Company giving such holder or prospective holder (a) the right to require the
Company, upon any registration of any of its securities, to include, among the
securities which the Company is then registering, securities owned by such
holder, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of its securities will not limit the number of shares sought
to be included by Holder or reduce the offering price thereof; or (b) the right
to require the Company to initiate any registration of any securities of the
Company. The foregoing limitation shall not apply to registration rights
previously granted by the Company pursuant to its Confidential Private Placement
Memorandum dated September 18, 1996.
ARTICLE FIVE
INDEMNIFICATION
Section 5.1 Indemnification by the Company. In the event of any
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registration of the Shares under the 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 or underwriter may become subject
under the 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 Shares were
registered under the 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
by the Holder expressly for use in the preparation thereof, and provided,
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further, that the Company shall not be liable to any person who participates as
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an underwriter in the offering or sale of Registered Shares or any other person,
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if any, who controls such underwriter within the meaning of the Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such person's failure to
send or give a copy of the Prospectus, as the same may be then supplemented or
amended, to the person asserting an untrue statement or alleged untrue statement
or omission or alleged omission at or prior to the written confirmation of the
sale of Registered Shares to such person if such statement or omission was
corrected in such Prospectus so long as such Prospectus, and any amendments or
supplements thereto, have been furnished to such underwriter in sufficient
numbers and in a timely manner to permit distribution 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 Registered Shares by Holder.
Section 5.2 Indemnification by Holder. In the event of any registration of
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the Registered Shares under the Act, the Holder agrees to indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section 5.1)
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 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 by the Holder
expressly for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement. 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 Registered Shares by Holder.
Section 5.3 Notices of Claims, etc. Promptly after receipt by an
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indemnified party of notice of the commencement of any action or proceeding
involving a Claim referred to in this Article Five, 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 Five,
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
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release from all liability in respect of such Claim.
Section 5.4 Indemnification Payments. The indemnification required by this
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Article Five 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 SIX
MISCELLANEOUS
Section 6.1 Notices. All notices required or permitted herein must be in
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writing and shall be deemed to have been duly given the first business day
following the date of service if served personally, on the first business day
following the date of actual receipt if delivered by telecopier, telex or other
similar communication to the party or parties to whom notice is to be given, on
the first business day following delivery to an air courier, if sent by
overnight air courier guaranteeing next day delivery, or on the third business
day after mailing if mailed to the party or parties to whom notice is to be
given by registered or certified mail, return receipt requested, postage
prepaid, to the parties at the addresses set forth below, or to such other
addresses as either party hereto may designate to the other by notice from time
to time for this purpose.
ENVIRONMENTAL SAFEGUARDS, INC.
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx, President
Telephone No. 000-000-0000
Facsimile No: 000-000-0000
With a copy to:
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Xxxxxxx, Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
HOLDER
c/x Xxxxxx, Xxxxxxx & Company
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
With a copy to:
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Xxxxxx, Xxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Section 6.2 Term of the Agreement. This Agreement shall terminate with
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respect to Holder on the earlier to occur of (i) all of the Registered Shares
having been registered as provided in Article One or (ii) two years after the
Preferred Stock is converted in full; provided, however, that the provisions of
Article One shall not terminate if Holder makes a registration request pursuant
to this Agreement which request is currently tolled by reason of one of the
clauses (i) - (iv) in Section 1.2(b), but shall terminate 30 days after notice
of the suspension of such tolling shall have been given to Holder.
Section 6.3 Mergers, Etc. The Company shall not, directly or indirectly,
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enter into any merger, consolidation, or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation, or reorganization, agree in writing
to assume the obligations of the Company under this Agreement, and for this
purpose references hereunder to "Registered Shares" shall be deemed to be
references to the securities that the Holders would be entitled to receive in
exchange for Registered Shares under any such merger, consolidation, or
reorganization.
Section 6.4 Entire Agreement. This Agreement contains and constitutes the
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entire agreement between and among the parties with respect to the matters set
forth herein and supersedes all prior agreements and understandings between the
parties hereto relating to the subject matter hereof. There are no agreements,
understandings, restrictions, warranties or representations among the parties
relating to the subject matter hereof other than those set forth or referred to
herein. This instrument is not intended to have any legal effect whatsoever, or
to be a legally binding agreement or any evidence thereof, until it has been
signed by all parties hereto.
Section 6.5 Binding Effect. This Agreement shall be binding on and
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enforceable by the Holder and by the Company and its successors. No transferee
of Registered Shares shall acquire any rights under this Agreement except with
the written consent of the Company, which may be withheld for any reason. In
the event the Company is a party to a merger or consolidation in a transaction
in which the Registered Shares are converted into equity securities of another
entity, then the Company shall cause such other entity to assume the Company's
obligations under this Agreement such that this Agreement shall apply to the
equity securities received by the Holder in exchange for the Registered Shares,
unless such equity securities are, upon receipt and without further action by
the Holder, readily salable without registration under the Act.
Section 6.6 Construction. This Agreement shall be construed, enforced and
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governed in accordance with the laws of the State of Texas. All pronouns and
any variations thereof shall be
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deemed to refer to the masculine, feminine or neuter gender thereof or to the
plurals of each, as the identity of the person or persons or the context may
require. The descriptive headings contained in this Agreement are for reference
purposes only and are not intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement or any provision contained herein.
Section 6.7 Amendments and Waivers. The provisions of this Agreement may
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not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless agreed to in
writing by both the Company and the Holder.
Section 6.8 Severability. Whenever possible, each provision of this
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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 6.9 Successors and Assigns. Except as otherwise provided herein,
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the provisions shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto. No party hereto may
assign its rights or delegate its obligations under this Agreement without the
prior written consent of the other parties hereto.
Section 6.10 Counterparts. This Agreement may be executed in any number of
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Counterparts and by the parties hereto in separate Counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates
shown below.
HOLDER:
*
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*
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Date
COMPANY: ENVIRONMENTAL SAFEGUARDS, INC.
By: *
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Xxxxx X. Xxxxxxx, President
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*
__________________________________________
Date
* executed registration rights agreement will be
provided upon request.
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