Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
ADA-ES, INC
AND
PURCHASERS OF ADA-ES SHARES
OCTOBER 21, 2005
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions 2
ARTICLE 2 Registration Rights 4
2.1 Required Registration 4
2.2 Current Public Information 4
2.3 Demand Registration. 5
2.4 Piggyback Registration. 7
2.5 Holdback Agreements. 8
2.6 Registration Procedures 8
2.7 Conditions Precedent to Company's Obligations
Pursuant to this Agreement 11
2.8 Fees and Expenses 11
2.9 Indemnification. 12
2.10 Participation in Registrations. 14
ARTICLE 3 Transfers of Certain Rights 15
3.1 Transfer 15
3.2 Transferees 15
3.3 Subsequent Transferees 15
ARTICLE 4 Miscellaneous 15
4.1 Recapitalizations, Exchanges, etc 15
4.2 No Inconsistent Agreements 16
4.3 Amendments and Waivers 16
4.4 Severability 16
4.5 Counterparts 16
4.6 Notices 16
4.7 Governing Law 17
4.8 Forum; Service of Process 17
4.9 Captions 17
4.10 No Prejudice 17
4.11 Words in Singular and Plural Form 17
4.12 Remedy for Breach 17
4.13 Successors and Assigns, Third Party Beneficiaries 17
4.14 Entire Agreement 17
4.15 Attorneys' Fees 17
4.16 Termination of Rights 17
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of October 21, 2005, is entered
into by and among ADA-ES, a Colorado corporation (the "Company") and the
Persons whose names are set forth on the signature pages attached hereto
(each a "Subscriber," and together, the "Subscribers").
RECITALS:
A. The Company desires to issue and sell 789,089 shares of its Common
Stock to accredited investors as set forth in the Subscription Agreements
dated as of October 21, 2005, entered into by and between the Company and the
Subscribers thereto (the "Subscription Agreement");
B. It is a condition precedent to the consummation of the transactions
contemplated by the Subscription Agreement that the Company provide for the
rights set forth in this Agreement; and
C. Certain terms used in this Agreement are defined in Article 1
hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound, the parties hereto hereby agree
as follows:
ARTICLE 1
DEFINITIONS
"Affiliate" means any Person that directly or indirectly controls, or is
under control with, or is controlled by such Person. As used in this
definition, "control" (including with its correlative meanings, "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of a Person (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Business Day" means any day excluding Saturday, Sunday or any other day
which is a legal holiday under the laws of the State of Colorado or is a day
on which banking institutions therein located are authorized or required by
law or other governmental action to close.
"Closing Date" means October 21, 2005.
"Common Stock" means the common stock, no par value per share, of the
Company.
"Company" has the meaning set forth in the preamble.
"Designated Holder" means a holder of Registrable Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
2
"Indemnified Party" has the meaning set forth in Section 2.9.
"Losses" has the meaning set forth in Section 2.9.
"Majority Holders" means holders of a majority (by number of shares) of
the Registrable Securities.
"Person" means any individual, company, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated
organization, governmental body or other entity.
"Piggyback Registration" has the meaning set forth in Section 2.4.
"Registration Period" means the two years, plus any additional periods
required by the second paragraph of Section 2.1, during which the
Registration Statement contemplated by Section 2.1 is required to remain
effective.
"Registrable Securities" means, subject to the immediately following
sentences, (i) shares of Common Stock acquired by the applicable Subscriber
from the Company pursuant to the Subscription Agreement and (ii) any shares
of Common Stock issued or issuable, directly or indirectly, with respect to
the securities referred to in clause (i) by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. In addition, any particular
shares of Common Stock constituting Registrable Securities will cease to be
Registrable Securities when they (x) have been effectively registered under
the Securities Act and disposed of in accordance with a Registration
Statement covering them, (y) have been sold to the public pursuant to Rule
144 (or by similar provision under the Securities Act), or (z) are eligible
for resale under Rule 144(k) (or by similar provision under the Securities
Act) without any limitation on the amount of securities that may be sold
under paragraph (e) thereof.
"Registration Statement" means a registration statement on Form S-3 (or,
if the Company is not eligible to use Form S-3, such other appropriate
registration form of the SEC pursuant to which the Company is eligible to
register the resale of Registrable Securities) filed by the Company under the
Securities Act which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
registration statement, which shall permit the Subscribers to offer and sell,
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act, the Registrable Securities.
"Representatives" has the meaning set forth in Section 2.9.
"Required Filing Date" has the meaning set forth in Section 2.1.
"Required Registration Statement" has the meaning set forth in Section
2.1.
"SEC" means the United States Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
3
"Subscriber(s)" has the meaning set forth in the preamble.
"Subscription Agreement" has the meaning set forth in the recitals.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Required Registration. The Company shall use its best efforts to
prepare and as promptly as possible after the date hereof, but in any event,
not later than ninety (90) days from the Closing Date (or, if such 90th day
is not a Business Day, by the first Business Day thereafter) (the "Required
Filing Date") file a Registration Statement with the SEC (the "Required
Registration Statement") and cause the Required Registration Statement to be
declared effective under the Securities Act within 150 days after the Closing
Date (or, if such 150th day is not a Business Day, by the first Business Day
thereafter). The Company agrees to include in the Required Registration
Statement all information which the Designated Holders shall reasonably
request and as may be permitted by applicable law. If the Company fails to
file the Required Registration Statement by the Required Filing Date, other
than due to a force majeure event described in Section 4.17, the Company
shall pay each Subscriber in cash an amount per month equal to one percent
(1%) of the amount paid by such Subscriber for the Registrable Securities
pursuant to the Subscription Agreement, which shall be Subscriber's sole
remedy for such failure.
The Company shall use its best efforts to keep the Required Registration
Statement continuously effective for a period of two years after the
Registration Statement first becomes effective, plus the number of days
during which such Registration Statement was not effective or usable pursuant
to Sections 2.5(b), 2.6(e) or 2.6(i) hereof, or such shorter period as will
terminate when all of the Registrable Securities covered by the Required
Registration Statement have been disposed of in accordance with the Required
Registration Statement or have otherwise ceased to be Registrable Securities.
In the event the Company shall give any notice pursuant to Sections 2.6(e) or
(i) hereof, the additional time period mentioned in this Section 2.1 during
which the Required Registration Statement is to remain effective shall be
extended by the number of days during the period from and including the date
of the giving of such notice pursuant to Sections 2.6(e) or (i) to and
including the date when each seller of a Registrable Security covered by the
Registration Statement shall have received the copies of the supplemented or
amended prospectus contemplated by Sections 2.6(e).
The Company may include in any registration filed pursuant to this
Section 2.1, such additional securities as it may be obligated to include
pursuant to any contractual obligations entered into by the Company, and,
subject to any restrictions contained elsewhere in this Agreement, such
securities as the Company may elect to register for its own account.
2.2 Current Public Information. The Company covenants that it will use
its best efforts to file all reports required to be filed by it under the
Exchange Act and the rules and regulations adopted by the SEC thereunder, and
will use its best efforts to take such further action as the Subscribers may
reasonably request, all to the extent required to enable the holders of
Registrable Securities to sell Registrable Securities pursuant to Rule 144 or
Rule 144A adopted by the SEC under the Securities Act or any similar rule or
regulation hereafter adopted by the SEC. The Company shall, upon the request
of a Designated Holder, deliver to such Designated Holder a written statement
as to whether it has complied with such requirements during the twelve month
period immediately preceding the date of such request.
4
2.3 Demand Registration.
(a) Subject to Section 2.3(g), upon the written request of the Majority
Holders, requesting that the Company effect the registration under the
Securities Act of all or part of such Designated Holders' Registrable
Securities and specifying the intended method of disposition thereof, the
Company will promptly give written notice of such requested registration to
all Designated Holders, and thereafter the Company will use its best efforts
to effect as expeditiously as possible the registration under the Securities
Act of the following:
(i) the Registrable Securities which the Company has been so requested
to be registered by such Designated Holders for disposition in accordance
with the intended method of disposition stated in such request;
(ii) all other Registrable Securities the holders of which shall have
made a written request to the Company for registration thereof within 30 days
after the giving of such written notice by the Company (which request shall
specify the intended method of disposition of such Registrable Securities);
and
(iii) all shares of Common Stock which the Company or Persons entitled
to exercise "piggy-back" registration rights pursuant to contractual
commitments of the Company may elect to register in connection with the
offering of Registrable Securities pursuant to this Section 2.3 or otherwise;
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any, so to be registered; provided,
that, the provisions of this Section 2.3 shall not require the Company to
effect more than one registration of Registrable Securities in addition to
the Required Registration Statement contemplated by Section 2.1.
(b) The registrations under this Section 2.3 shall be on an appropriate
form for a Registration Statement that permits the disposition of such
Registrable Securities in accordance with the intended methods of
distribution specified by the Majority Holders in their request for
registration. The Company agrees to include in any such Registration
Statement all information which Designated Holders of Registrable Securities
being registered therein shall reasonably request so as to allow them to sell
their Registrable Securities by the method of distribution selected by them.
(c) A registration requested pursuant to this Section 2.3 shall not be
deemed to have been effected (i) unless a Registration Statement with respect
thereto has become effective; provided, that a Registration Statement which
does not become effective after the Company has filed a Registration
Statement with respect thereto solely by reason of the refusal to proceed of
the Majority Holders (other than a refusal to proceed based upon the advice
of counsel relating to a matter with respect to the Company) shall be deemed
to have been effected by the Company at the request of the Majority Holders
unless the Designated Holders electing to have Registrable Securities
registered pursuant to such Registration Statement shall have elected to pay
all fees and expenses otherwise payable by the Company in connection with
such registration pursuant to Section 2.8, (ii) if, after it has become
effective, such registration is withdrawn by the Company (other than at the
request of the Majority Holders) or interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental
agency or court for any reason prior to the expiration of a 180 day period
following such Registration Statement's effectiveness, or (iii) if the
conditions to closing specified in any purchase agreement or underwriting
5
agreement entered into in connection with such registration are not
satisfied, other than due solely to some act or omission by the Designated
Holders electing to have Registrable Securities registered pursuant to such
Registration Statement.
(d) If a requested registration pursuant to this Section 2.3 involves an
underwritten offering, the underwriter or underwriters thereof shall be
selected by the holders of a majority (by number of shares) of the
Registrable Securities requested to be included in such Registration
Statement and shall be reasonably acceptable to the Company in its sole
discretion.
(e) If a requested registration pursuant to this Section 2.3 involves an
underwritten offering, and the managing underwriter shall advise the Company
in writing (with a copy to each Designated Holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration (including securities of the
Company or any other Person which are not Registrable Securities) exceeds the
number which can be sold in such offering within a price range reasonably
acceptable to the Company and to the holders of a majority (by number of
shares) of the Registrable Securities requested to be included in such
Registration Statement, the Company will include in such registration, to the
extent of the number which the Company is so advised can be sold in such
offering, (i) first, any shares of Common Stock or other securities as to
which the Company has granted registration rights prior to the date of this
Agreement which by their terms require priority over the rights granted under
this Section 2.3, (ii) second, the Registrable Securities which have been
requested to be included in such registration by the Designated Holders
pursuant to this Agreement (pro rata based on the amount of Registrable
Securities sought to be registered by such persons), (iii)third, provided
that no securities sought to be included by the Designated Holders have been
excluded from such registration, the securities of other persons entitled to
exercise "piggy-back" registration rights pursuant to other contractual
commitments of the Company (pro rata based on the amount of securities sought
to be registered by such persons) and (iv)fourth, securities the Company
proposes to register for its own account.
(f) The Company shall use its best efforts to keep any Registration
Statement filed pursuant to this Section 2.3 continuously effective (i) for a
period of one year after the Registration Statement first becomes effective,
plus the number of days during which such Registration Statement was not
effective or usable pursuant to Sections 2.5(b), 2.6(e) or 2.6(i); (ii) if
such Registration Statement related to an underwritten offering, for such
period as in the opinion of counsel for the underwriters a prospectus is
required by law to be delivered in connection with sales of Registrable
Securities by an underwriter or dealer, or (iii) for such shorter period as
will terminate when all of the Registrable Securities covered by the Required
Registration Statement have been disposed of in accordance with the Required
Registration Statement or have otherwise ceased to be Registrable Securities.
In the event the Company shall give any notice pursuant to Sections 2.6(e) or
(i), the additional time period mentioned in Section 2.3(f)(i) during which
the Required Registration Statement is to remain effective shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Sections 2.6(e) or (i) to and including the
date when each seller of a Registrable Security covered by the Registration
Statement shall have received the copies of the supplemented or amended
prospectus contemplated by Sections 2.6(e).
(g) The right of Designated Holders to have Registrable Securities
registered pursuant to this Section 2.3 is only exercisable following the
expiration of the Registration Period or, if, prior to the expiration of the
Registration Period, the Company becomes ineligible to register the
Registrable Securities on the Registration Statement contemplated by Section
2.1 or such Registration Statement otherwise becomes unusable or ineffective
and the Company is not able to correct the misstatements, have the applicable
6
stop order rescinded or otherwise restore the effectiveness of the
Registration Statement as contemplated by this Agreement.
2.4 Piggyback Registration.
(a) Whenever the Company proposes to register any of its securities
under the Securities Act (other than pursuant to a registration pursuant to
Section 2.1, Section 2.3 or a registration on Form S-4 or S-8 or any
successor or similar forms) and the registration form to be used may be used
for the registration of Registrable Securities, whether or not for sale for
its own account, the Company will give prompt written notice (but in no event
less than 25 days before the anticipated filing date) to all Designated
Holders, and such notice shall describe the proposed registration and
distribution and offer to all Designated Holders the opportunity to register
the number of Registrable Securities as each such Designated Holder may
request. The Company will include in such registration statement all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 15 days after the Designated Holders'
receipt of the Company's notice (a "Piggyback Registration").
(b) The Company shall use its best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggyback Registration
to be included on the same terms and conditions as any similar securities of
the Company or any other security holder included therein and to permit the
sale or other disposition of such Registrable Securities in accordance with
the intended method of distribution thereof.
(c) Any Designated Holder shall have the right to withdraw its request
for inclusion of its Registrable Securities in any Registration Statement
pursuant to this Section 2.4 by giving written notice to the Company of its
request to withdraw; provided, that in the event of such withdrawal (other
than pursuant to Section 2.4(e) hereof, the Company shall not be required to
reimburse such holder for the fees and expenses referred to in Section 2.8
hereof incurred by such Designated Holder prior to such withdrawal, unless
such withdrawal was due to a material adverse change to the Company. The
Company may withdraw a Piggyback Registration at any time prior to the time
it becomes effective.
(d) If (i) a Piggyback Registration involves an underwritten offering of
the securities being registered, whether or not for sale for the account of
the Company, to be distributed (on a firm commitment basis) by or through one
or more underwriters of recognized standing under underwriting terms
appropriate for such a transaction, and (ii) the managing underwriter of such
underwritten offering shall inform the Company and Designated Holders
requesting such registration by letter of its belief that the distribution of
all or a specified number of such Registrable Securities concurrently with
the securities being distributed by such underwriters would interfere with
the successful marketing of the securities being distributed by such
underwriters (such writing to state the basis of such belief and the
approximate number of such Registrable Securities which may be distributed
without such effect), then the Company will be required to include in such
registration only the amount of securities which it is so advised should be
included in such registration. In such event: (x) in cases initially
involving the registration for sale of securities for the Company's own
account, securities shall be registered in such offering in the following
order of priority: (i) first, the securities which the Company proposes to
register, (ii) second, any shares of Common Stock or other securities as to
which the Company has granted registration rights prior to the date of this
Agreement which by their terms require priority over the rights granted under
this Section 2.4, (iii) third, Registrable Securities and securities which
have been requested to be included in such registration by other Persons
entitled to exercise "piggy-back" registration rights pursuant to contractual
commitments of the Company (pro rata based on the amount of securities sought
to be registered by Designated Holders and such other Persons); and (y) in
7
cases not initially involving the registration for sale of securities for the
Company's own account, securities shall be registered in such offering in the
following order of priority: (i) first, the securities of any Person whose
exercise of a "demand" registration right pursuant to a contractual
commitment of the Company is the basis for the registration, (ii) second,
Registrable Securities and securities which have been requested to be
included in such registration by Persons entitled to exercise "piggy-back"
registration rights pursuant to contractual commitments of the Company (pro
rata based on the amount of securities sought to be registered by Designated
Holders and such other Persons), and (iii) third, the securities which the
Company proposes to register for its own account.
(e) If, as a result of the proration provisions of this Section 2.4, any
Designated Holders shall not be entitled to include all Registrable
Securities in a Piggyback Registration that such Designated Holders has
requested to be included, such holder may elect to withdraw his request to
include Registrable Securities in such registration.
(f) The right of the Designated Holders to register Registrable
Securities pursuant to this Section 2.4 is only exercisable with respect to
Registrable Securities not then covered by an effective Registration
Statement contemplated by Section 2.1 or Section 2.3. The rights of the
Designated Holders under this Section 2.4 shall survive the expiration of the
Registration Period.
2.5 Holdback Agreements.
(a) To the extent not inconsistent with applicable law, upon the request
of the Company or the underwriter, in the case of an underwritten public
offering of the Company's securities other than in connection with the
registration contemplated by Section 2.1, each Designated Holder will not
effect any public sale or distribution (other than those included in the
registration statement being filed with respect to such public offering) of
any securities of the Company, or any securities, options or rights
convertible into or exchangeable or exercisable for such securities during
the 14 days prior to and the 90-day period beginning on such effective date,
unless (in the case of an underwritten public offering) the managing
underwriters otherwise agree to a shorter period of time. Notwithstanding
the foregoing, no Designated Holder shall be required to enter into any such
"lock up" agreement unless and until all of the Company's executive officers
and directors execute substantially similar "lock up" agreements. Neither
the Company nor the underwriter shall amend, terminate or waive a "lock up"
agreement unless each "lock up" agreement with a Designated Holder is also
amended or waived in a similar manner or terminated, as the case may be.
(b) The Company shall have the right at any time, to suspend the filing
of a Registration Statement under Section 2.3 or require that the Designated
Holders of Registrable Securities suspend further open market offers and
sales of Registrable Securities pursuant to a Registration Statement filed
hereunder for a period not to exceed an aggregate of 30 days in any six
month period or an aggregate of 60 days in any twelve-month period for valid
business reasons (not including avoidance of their obligations hereunder) (i)
to avoid premature public disclosure of a pending corporate transaction,
including pending acquisitions or divestitures of assets, mergers and
combinations and similar events; and (ii) upon the occurrence of any of the
events specified in Sections 2.6(e) or (i).
2.6 Registration Procedures. The Company will use its best efforts to
effect the registration of Registrable Securities pursuant to this Agreement
in accordance with the intended methods of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
8
(a) before filing the Registration Statement, the Company will furnish
to counsel of any holder of Registrable Securities (assuming the Company has
been timely notified as to the identity and contact information for such
counsel), a copy of such Registration Statement, and will provided such
counsel with all correspondence with the SEC regarding the Registration
Statement;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith
as may be necessary to keep such Registration Statement effective for the
period provided for in Section 2.1 or Section 2.3, or the periods
contemplated by the Company or the Persons requesting any Registration
Statement filed pursuant to Section 2.4;
(c) furnish to each seller of Registrable Securities included in the
Registration Statement such number of copies of such Registration Statement,
each amendment and supplement thereto, the prospectus included in the
Registration Statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under such state securities or blue sky laws as any
Designated Holder reasonably requests, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller and to keep each such registration or
qualification (or exemption therefrom) effective during the period which the
Registration Statement is required to be kept effective (provided, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph, (ii) subject itself to taxation in any such jurisdiction, (iii)
consent to general service of process in any such jurisdiction or (iv)
attempt to register or qualify securities for sale in any jurisdiction in
which counsel for the Company has advised the Company that such registration
or qualification would be likely to be unavailable absent unreasonable effort
or expense);
(e) notify each seller of such Registrable Securities, at any time when
a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in the Registration Statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and, at the request of any such seller, the Company
will as soon as possible prepare and furnish to such seller a reasonable
number of copies of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed and, if not so listed, to be approved for trading on any
automated quotation system of a national securities association on which
similar securities of the Company are quoted;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration Statement;
9
(h) enter into such customary agreements (including underwriting
agreements) and take all other customary and appropriate actions as the
holders of a majority of the Registrable Securities being registered or the
underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(i) notify each Designated Holder of any stop order issued or threatened
by the SEC;
(j) otherwise comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve
months beginning with the first day of the Company's first full calendar
quarter after the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification
of any securities included in such Registration Statement for sale in any
jurisdiction, the Company will use its best efforts to promptly obtain the
withdrawal of such order;
(l) if requested by a Designated Holder, obtain one or more comfort
letters, dated the effective date of the Registration Statement (and, if such
registration includes an underwritten offering, dated the date of the closing
under the underwriting agreement), signed by the Company's independent public
accountants in customary form and covering such matter of the type
customarily covered by such accountant comfort letters as the Majority
Holders of the Registrable Securities being sold under the Registration
Statement shall reasonably request;
(m) provide a legal opinion of the Company's outside counsel, dated the
effective date of such Registration Statement (and, if such registration
includes an underwritten offering, dated the date of the closing under the
underwriting agreement), with respect to the Registration Statement, each
amendment and supplement thereto, the prospectus included therein (including
the preliminary prospectus) and such other documents relating thereto in
customary form and covering such matters of the type customarily covered by
legal opinions of such nature;
(n) subject to execution and delivery of mutually satisfactory
confidentiality agreements, make available at reasonable times for inspection
by any seller of Registrable Securities, any managing underwriter
participating in any disposition of such Registrable Securities pursuant to
the Registration Statement, and any attorney, accountant or other agent
retained by such seller or any managing underwriter, during normal business
hours of the Company at the Company's corporate office in Denver, Colorado
and without unreasonable disruption of the Company's business or unreasonable
expense to the Company and solely for the purpose of due diligence with
respect to the Registration Statement, legally disclosable, financial and
other records and pertinent corporate documents of the Company and its
subsidiaries reasonably requested by such persons, and cause the Company's
employees and independent accountants to supply all similar information
reasonably requested by any such seller, managing underwriter, attorney,
accountant or agent in connection with the Registration Statement, as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility under applicable securities laws;
(o) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities
and their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers; and
10
(p) take all other steps reasonably necessary to effect the registration
of the Registrable Securities contemplated hereby.
2.7 Conditions Precedent to Company's Obligations Pursuant to this
Agreement. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement that each of the
Designated Holders whose Registrable Securities are to be registered pursuant
to this Agreement shall furnish such Designated Holder's written agreement to
be bound by the terms and conditions of this Agreement prior to performance
by the Company of its obligations under this Agreement. By executing and
delivering this Agreement, each Designated Holder represents and warrants
that the information concerning, and representations and warranties by, such
Designated Holder, including information concerning the securities of the
Company held, beneficially or of record, by such Designated Holder, furnished
to the Company pursuant to the Subscription Agreement or otherwise, are true
and correct as if the same were represented and warranted on the date any
Registration Statement required pursuant to this Agreement is filed with the
SEC or the date of filing with the SEC of any amendment thereto, and each
Designated Holder covenants to immediately notify the Company in writing of
any change in any such information, representation or warranty and to refrain
from offering or disposing of any securities pursuant to any Registration
Statement until the Company has reflected such change in such Registration
Statement. By executing and delivering this Agreement, each Designated
Holder further agrees to furnish any additional information as the Company
may reasonably request in connection with any action to be taken by the
Company pursuant to this Agreement, and to pay such Designated Holder's
expenses which are not required to be paid by the Company pursuant to this
Agreement.
2.8 Fees and Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement including, without
limitation, all registration and filing fees payable by the Company, fees and
expenses of compliance by the Company with securities or blue sky laws,
printing expenses of the Company, messenger and delivery expenses of the
Company, and fees and disbursements of counsel for the Company and all
independent certified public accountants of the Company, and other Persons
retained by the Company will be borne by the Company, and the Company will
pay its internal expenses (including, without limitation, all salaries and
expenses of the Company's employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense of any
liability insurance of the Company and the expenses and fees for listing or
approval for trading of the securities to be registered on each securities
exchange on which similar securities issued by the Company are then listed or
on any automated quotation system of a national securities association on
which similar securities of the Company are quoted. In connection with any
Registration Statement filed hereunder, the Company will pay the reasonable
fees and expenses of a single counsel retained by the Designated Holders of a
majority (by number of shares) of the Registrable Securities requested to be
included in such Registration Statement. The Company shall have no
obligation to pay any underwriting discounts or commissions attributable to
the sale of Registrable Securities and any of the expenses incurred by any
Designated Holder which are not specifically payable by the Company as
described above, such costs to be borne by such Designated Holder or Holders,
including, without limitation, the following: underwriting fees, discounts
and expenses, if any, applicable to any Designated Holder's Registrable
Securities; fees and disbursements of counsel or other professionals that any
Designated Holder may choose to retain in connection with a Registration
Statement filed pursuant to this Agreement (except as otherwise provided
herein); selling commissions or stock transfer taxes applicable to the
Registrable Securities registered on behalf of any Designated Holder; any
other expenses incurred by or on behalf of such Designated Holder in
connection with the offer and sale of such Designated Holder's Registrable
Securities other than expenses which the Company is expressly obligated to
pay pursuant to this Agreement.
11
2.9 Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each Designated Holder and its general or limited
partners, officers, directors, members, managers, employees, advisors,
representatives, agents and Affiliates (collectively, the "Representatives")
from and against any loss, claim, damage, liability, attorney's fees, cost or
expense and costs and expenses of investigating and defending any such claim
(collectively, the "Losses"), joint or several, and any action in respect
thereof to which such Designated Holder or its Representatives may become
subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereto)
arise out of or are based upon (i) any breach by the Company of any of its
representations, warranties or covenants contained in this Agreement, (ii)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus or preliminary or summary prospectus or
any amendment or supplement thereto or (iii) 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 shall
reimburse each such Designated Holder and its Representatives for any legal
or any other expenses incurred by them in connection with investigating or
defending or preparing to defend against any such Loss, action or proceeding;
provided, however, that the Company shall not be liable to any such
Designated Holder or other indemnitee in any such case to the extent that any
such Loss (or action or proceeding, whether commenced or threatened, in
respect thereof) arises out of or is based upon (x) an untrue statement or
alleged untrue statement or omission or alleged omission, made in such
Registration Statement, any such prospectus or preliminary or summary
prospectus or any amendment or supplement thereto, in reliance upon, and in
conformity with, written information prepared and furnished to the Company by
any Designated Holder or its Representatives expressly for use therein and,
with respect to any untrue statement or omission or alleged untrue statement
or omission made in any preliminary prospectus relating to the Registration
Statement, to the extent that a prospectus relating to the Registrable
Securities was required to be delivered by such Designated Holder under the
Securities Act in connection with such purchase, there was not sent or given
to such person, at or prior to the written confirmation of the sale of such
Registrable Securities to such person, a copy of the final prospectus that
corrects such untrue statement or alleged untrue statement or omission or
alleged omission if the Company had previously furnished copies thereof to
such Designated Holder or (y) use of a Registration Statement or the related
prospectus during a period when a stop order has been issued in respect of
such Registration Statement or any proceedings for that purpose have been
initiated or use of a prospectus when use of such prospectus has been
suspended pursuant to Sections 2.5(b), 2.6(e) or (i); provided that in each
case, that such Holder was sent prior written notice of such stop order,
initiation of proceedings or suspension from the Company. In no event,
however, shall the Company be liable for indirect, incidental or
consequential or special damages of any kind, even if the Company was aware
of or specifically advised as to the possibility of such damages. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Designated Holders.
(b) In connection with the filing of the Registration Statement by the
Company pursuant to this Agreement, the Designated Holders will furnish to
the Company in writing such information as the Company reasonably requests
for use in connection with such Registration Statement and the related
prospectus and, to the fullest extent permitted by law, each such Designated
Holder will indemnify and hold harmless the Company and its Representatives
from and against any Losses, severally but not jointly, and any action in
respect thereof to which the Company and its Representatives may become
subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon (i) the purchase or sale of Registrable
12
Securities during a suspension as set forth in Sections 2.5(b), 2.6(e) or
2.6(i) hereof, in each case after written notice of such suspension was sent
to the Designated Holder, (ii) any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, prospectus or
preliminary or summary prospectus or any amendment or supplement thereto, or
(iii) any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
but, with respect to clauses (ii) and (iii) above, only to the extent that
such untrue statement or omission is made in such Registration Statement, any
such prospectus or preliminary or summary prospectus or any amendment or
supplement thereto, in reliance upon and in conformity with written
information prepared and furnished to the Company by such Designated Holder
expressly for use therein or by failure of such Designated Holder to deliver
a copy of the Registration Statement or prospectus or any amendments or
supplements thereto, and such Designated Holder will reimburse the Company
and each Representative for any legal or any other expenses incurred by them
in connection with investigating or defending or preparing to defend against
any such Loss, action or proceeding; provided, however, that such Designated
Holder shall not be liable in any such case to the extent that prior to the
filing of any such Registration Statement or prospectus or amendment or
supplement thereto, such Designated Holder has furnished in writing to the
Company information expressly for use in such Registration Statement or
prospectus or any amendment or supplement thereto which corrected or made not
misleading information previously furnished to the Company. In no event,
however, shall any Designated Holder be liable for indirect, incidental or
consequential or special damages of any kind, even if the Designated Holder
was aware of or specifically advised as to the possibility of such damages.
(c) Promptly after receipt by any Person in respect of which indemnity
may be sought pursuant to Section 2.9(a) or 2.9(b) (an "Indemnified Party")
of notice of any claim or the commencement of any action, the Indemnified
Party shall, if a claim in respect thereof is to be made against the Person
against whom such indemnity may be sought (an "Indemnifying Party"), promptly
notify the Indemnifying Party in writing of the claim or the commencement of
such action; provided, that the failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability which it may have
to an Indemnified Party under Section 2.9(a) or 2.9(b) except to the extent
of any actual prejudice resulting therefrom. If any such claim or action
shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof
with counsel reasonably satisfactory to the Indemnified Party. After notice
from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or action, the Indemnifying Party shall not
be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation; provided, that the
Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party and its Representatives who may be subject to
liability arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party, but the fees
and expenses of such counsel shall be for the account of and shall be paid by
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in
the written opinion of counsel to such Indemnified Party, representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however,
that the Indemnifying Party shall not, in connection with any one such claim
or action or separate but substantially similar or related claims or actions
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for
all Indemnified Parties. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any claim
or pending or threatened proceeding in respect of which the Indemnified Party
is or could have been a party and indemnity could have been sought hereunder
13
by such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such
claim or proceeding other than the payment of monetary damages by the
Indemnifying Party on behalf of the Indemnified Party. Whether or not the
defense of any claim or action is assumed by the Indemnifying Party, such
Indemnifying Party will not be subject to any liability for any settlement
made without its consent, which consent will not be unreasonably withheld.
(d) If the indemnification provided for in this Section 2.9 is
unavailable to the Indemnified Parties in respect of any Losses referred to
herein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Designated Holders on the other from the offering of the
Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company on the one hand and the
Designated Holders on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand
and of each Designated Holder on the other shall be determined by reference
to, among other things, whether any action taken, including any 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 such
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Designated Holders agree that it would not be just and
equitable if contribution pursuant to this Section 2.9(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the Losses referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 2.9, no Designated Holder shall be required to
contribute any amount in excess of the amount by which the total price at
which the Registrable Securities of such Designated Holder were offered to
the public. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11 (f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Each Designated Holder's obligations to contribute
pursuant to this Section 2.9 is several in the proportion that the proceeds
of the offering received by such Designated Holder bears to the total
proceeds of the offering received by all the Designated Holders. The
indemnification provided by this Section 2.9 shall be a continuing right to
indemnification with respect to sales of Registrable Securities and shall
survive the registration and sale of any Registrable Securities by any
Designated Holder and the expiration or termination of this Agreement. The
indemnity and contribution agreements contained herein are in addition to any
liability that any Indemnifying Party might have to any Indemnified Party.
2.10 Participation in Registrations.
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities
on the basis provided in any underwriting arrangements approved by the Person
or Persons entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities,
14
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements and this Agreement.
(b) Each Person that is participating in any registration under this
Agreement agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.6(e) or (i) above,
such Person will forthwith discontinue any further disposition of its
Registrable Securities pursuant to the Registration Statement and all use of
the Registration Statement or any prospectus or related document until such
Person receives copies of a supplemented or amended prospectus as
contemplated by such Section 2.6(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 Designated Holder's possession, of such
documents at the time of receipt of such notice. Furthermore, each
Designated Holder agrees that if such Designated Holder uses a prospectus in
connection with the offering and sale of any of the Registrable Securities,
the Designated Holder will use only the latest version of such prospectus
provided by Company.
ARTICLE 3
TRANSFERS OF CERTAIN RIGHTS
3.1 Transfer. The rights granted to the Subscribers under this
Agreement are non-transferable except for a transfer, without any
consideration whatsoever, to a person or entity which is an Affiliate of the
transferor, and any such transfer, in any case, shall be subject to the
provisions of Sections 3.2 and 3.3; provided that nothing contained herein
shall be deemed to permit an assignment, transfer or disposition of the
rights hereunder separate and apart from the Registrable Securities in
violation of the terms and conditions of the Subscription Agreement or
applicable law.
3.2 Transferees. Any permitted transferee to whom rights under this
Agreement are transferred shall, as a condition to such transfer, deliver to
the Company a written instrument by which such transferee agrees to be bound
by the obligations imposed upon the Subscriber under this Agreement to the
same extent as if such transferee were a Subscriber hereunder.
3.3 Subsequent Transferees. A transferee to whom rights are transferred
pursuant to this Section 3 may not again transfer such rights to any other
person or entity, other than as provided in Sections 3.1 or 3.2 above.
ARTICLE 4
MISCELLANEOUS
4.1 Recapitalizations, Exchanges, etc. The provisions of this Agreement
shall apply to the full extent set forth herein with respect to (i) the
Registrable Securities, (ii) any and all shares of Common Stock into which
the Registrable Securities are converted, exchanged or substituted in any
recapitalization or other capital reorganization by the Company and (iii) any
and all equity securities of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in conversion of, in exchange for or in
substitution of, the Registrable Securities and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof. The Company
shall cause any successor or assign (whether by merger, consolidation, sale
of assets or otherwise) to enter into a new registration rights agreement
with the Designated Holders on terms substantially the same as this Agreement
as a condition of any such transaction.
15
4.2 No Inconsistent Agreements. The Company has not and shall not enter
into any agreement with respect to its securities that prevents it from
performing this Agreement.
4.3 Amendments and Waivers. The provisions of this Agreement may be
amended and the Company may take action herein prohibited, or omit to perform
any act herein required to be performed by it, if, but only if, the Company
has obtained the written consent of the Majority Holders of the Registrable
Securities then in existence.
4.4 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid wider applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
4.5 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.6 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy, facsimile, email or
similar writing) and shall be deemed given or made as of the date delivered,
if delivered personally or by telecopy, facsimile or email (provided that
delivery by telecopy, facsimile or email shall be followed by delivery of an
additional copy personally, by mail or by overnight courier), one day after
being delivered by overnight courier or four business days after being
deposited in the mail, sent by registered or certified mail (postage prepaid
for the most expeditious form of delivery, return receipt requested), to the
parties at the following addresses (or to such other address or telex or
telecopy number as a party may have specified by notice given to the other
party pursuant to this provision):
If to the Company, to:
ADA-ES, Inc.
0000 XxxxxXxxx Xxx, Xxxx X
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Senior VP and CFO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxx@xxxxx.xxx
With copy to:
Schuchat, Xxxxxx & Xxxxxxx, LLC
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxx@xxxxxxxx.xxx
If to a Subscriber, to:
16
The address, facsimile number or email address set forth
on the signature page of this Agreement.
4.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without regard to the
conflicts of laws rules or provisions which would result in the application
of the substantive law of any other state.
4.8 Forum; Service of Process. Any legal suit, action or proceeding
brought by any party or any of its Affiliates arising out of or based upon
this Agreement shall be instituted in any federal or state court in Denver
County, Colorado, and each party waives any objection which it may now or
hereafter have to the laying of venue or any such proceeding, and irrevocably
submits to the jurisdiction of such courts in any such suit, action or
proceeding.
4.9 Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way limit or amplify the
terms and provisions hereof.
4.10 No Prejudice. The terms of this Agreement shall not be construed
in favor of or against any party on account of its participation in the
preparation hereof.
4.11 Words in Singular and Plural Form. Words used in the singular form
in this Agreement shall be deemed to import the plural, and vice versa, as
the sense may require.
4.12 Remedy for Breach. The Company hereby acknowledges that in the
event of any breach or threatened breach by the Company of any of the
provisions of this Agreement, the Designated Holders would have no adequate
remedy at law and could suffer substantial and irreparable damage.
Accordingly, the Company hereby agrees that, in such event, the Designated
Holders shall be entitled, and notwithstanding any election by any Designated
Holder to claim damages, to obtain a temporary and/or permanent injunction to
restrain any such breach or threatened breach or to obtain specific
performance of any such provisions, all without prejudice to any and all
other remedies which any Designated Holders may have at law or in equity.
4.13 Successors and Assigns, Third Party Beneficiaries. This Agreement
and all of the provisions hereof shall be binding upon and inure to the
benefit of the parties hereto, each permitted assignee of a party, any
Designated Holder permitted pursuant to Article 3 and their respective
permitted successors and assigns and executors, administrators and heirs.
4.14 Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the parties as to the subject matter hereof and
merges and supersedes all prior discussions, agreements and understandings of
any and every nature among them.
4.15 Attorneys' Fees. In the event of any action or suit based upon or
arising out of any actual or alleged breach by any party of any
representation, warranty, covenant or agreement in this Agreement, the
substantially prevailing party (as determined by the court by application of
equitable principles in making such determination) shall be entitled to
recover its reasonable attorneys' fees and expenses arising out of such
action or suit from the other party, in addition to any other relief ordered
by any court.
4.16 Termination of Rights. Upon the expiration of the Registration
Period all rights of Designated Holders under Section 2.1 of this Agreement
will terminate. All rights under this Agreement will terminate when the
Designated Holders no longer hold any Registrable Securities.
17
4.17 Force Majeure. Notwithstanding anything to the contrary in this
Agreement, no party to this Agreement will be liable for any failure or delay
in its performance under this Agreement due to any cause beyond its
reasonable control, including natural disasters, war, embargo, riot,
sabotage, labor shortage, act of terrorism, or governmental act, provided
that the delayed party (a) gives the other parties prompt notice of such
cause, and (b) uses reasonable commercial efforts to correct promptly such
failure or delay in performance.
[Signature Page Follows]
18
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed as of the date and year first written above.
COMPANY:
ADA-ES, INC.
A Colorado Corporation
By:
--------------------------------
Title:
-----------------------------
SUBSCRIBER:
-----------------------------------
[Print Name]
By:
--------------------------------
Title:
-----------------------------
JURISDICTION:
----------------------
ADDRESS:
---------------------------
---------------------------
Facsimile:
------------------------
Email address:
--------------------
AGGREGATE SUBSCRIPTION AMOUNT:
--------------------------------------------
Aggregate Number of Shares of Common Stock:
-------------------------------
19
